Oyo, an Indian budget hotel chain startup, is negotiating with investors for a new round of financing that would reduce the Indian company’s valuation to $3 billion or less, three sources familiar with the matter told TechCrunch.
The startup is working with investors including Malaysian sovereign wealth fund Khazanah for new financing, the sources said, asking to not be identified because the matter is private. The new funding round is also more likely to include several secondary deals that will value the startup at just $2.5 billion, the sources added.
The proposed terms, if realized, would represent a sharp decline from the peak valuation of $10 billion at which Oyo raised a funding round in 2019. A valuation of $3 billion or less would even be lower than the amount of capital Oyo has raised in equity and debt over the years.
Talks regarding new financing are ongoing, and their conditions may change or the round may not happen, sources warn.
The valuation cut is no surprise. SoftBank, which owns over 40% of Oyo, has internally reduced the Indian startup’s valuation to $2.7 billion in 2022. Oyo then said there was “no rational basis” for lowering its valuation.
Oyo – which counts SoftBank, Airbnb, Peak XV Partners and Lightspeed Venture Partners among its backers – has denied the “rumours”, saying there has been no “specific transaction”. Khazanah didn’t reply to a request for comment. The terms of the proposed valuation have not been previously announced.
“We deny all rumors, including those regarding the valuation contained in the article. Oyo continues to focus on better performance and higher profits, and occasionally engages with respected investors when requested, but at this stage there is no concrete transaction, let alone discussion on valuation ” – said a company spokesman.
The fresh financing considerations come after Oyo withdrew its draft red herring prospectus for its initial public offering for the second time, the source said. The Indian startup originally filed paperwork to go public in 2021, searching for to boost about $1.2 billion at a valuation of $12 billion at the time.
Indian market regulator SEBI has not approved the startup’s IPO application.
According to local media, Oyo founder and CEO Ritesh Agarwal told employees that the company expects revenue for the fiscal yr ending March at over $682 million.