Oyo, an Indian budget hotel chain startup, is finalizing a new fundraising of around $100 million to $125 million, bringing its valuation right down to $2.5 billion, two people familiar with the matter told TechCrunch.
This marks a sharp decline in the value of the Gurgaon-based startup, which was price $10 billion in 2019. The startup, struggling to draw institutional investors, has been aggressively acquiring wealthy individuals in recent months.
“We really think this asset makes a lot of sense today. Profitability and discount @70% in comparison with the previous valuation. IPO expected in 18-24 months – a representative of InCred, a financial company cooperating with Oyo, forwarded a message (displayed by TechCrunch) to the startup’s founder.
Early last month, TechCrunch reported that Oyo was searching for to boost funding of $3 billion or less. Oyo vehemently denied the “rumours, including valuation rumors” at the time. The size of the new round is more likely to be larger, said the above-mentioned sources, who asked to not be identified because the matter is not public.
The new funding comes after Oyo shelved its IPO plan last month. The startup – which counts SoftBank, Peak XV Ventures, Lightspeed, Airbnb and Microsoft among its backers – has withdrawn its IPO application from India’s markets regulator, the Securities and Exchange Board of India, twice in the last 4 years.
Oyo initially filed papers with SEBI for a 2021 listing but withdrew it and re-filed in 2023. The company, which has raised over $3 billion so far, sought to boost $1.2 billion at a valuation of $12 billion as a part of an initial public offering in 2021.
Oyo, once one of India’s hottest startups, runs an operating system of sorts that helps hoteliers accept digital bookings and payments. The startup once operated in dozens of markets, including the US and Europe, but has since limited its international presence.
Observed net profit of $12 million in the fiscal yr ending March, in accordance with founder and CEO Ritesh Agarwal.
Agarwal took out $2 billion in debt in 2019 to extend his stake in Oyo, then valued at $10 billion. It invested $700 million as core capital in Oyo and spent $1.3 billion on secondary purchase of Oyo shares. The startup has not commented on its debt status since then.
Indian newspaper Economic Times also reported about new financing on Monday.