India’s Oyo Hotels Pausing IPO

Hospitality startup Oyo Hotels is putting plans for an initial public offering (IPO) on hold until after September to clean up its financial house and ride out the volatility in the markets, according to media reports on Tuesday (May 24), citing unnamed sources with insider information.

Oyo was valued at $9 billion at the start of this year and was planning to raise 84.3 billion rupees ($1.1 billion) with the sale of new and secondary shares as well as those held by existing investors. SoftBank owns a 47% stake in the company. Oyo first started file preparations last fall.

Founded in 2015, Oyo is an Indian multinational hospitality chain offering space in hotels, homes and living spaces. The business model was unended during the worldwide Covid lockdowns.

In 2020 when the pandemic first took hold, SoftBank stepped in and laid off staff and took back $75 million it gave the company earmarked for Oyo’s growth in Latin America. Oyo also reeled in its operations in Japan at that time.

See also: India’s Oyo Hotel Startup to Target $9B Valuation in IPO

The board of Oyo, officially called Oravel Stays Ltd., met to discuss changes to the offering and the timing and also consulted with bankers and investors, the sources told Bloomberg. If Oyo begins the IPO process again before 2022 is over, the earliest possible IPO would be in 2023, the sources told Bloomberg.

Kotak Investment Banking and Oyo’s other bankers have filed a request with the Securities and Exchange Board of India (SEBI) to update its draft prospectus with the latest financial information after the close of the September quarter, according to Bloomberg’s sources.

Read more: Hotel Booking Firm Oyo Mulls Smaller IPO Amid Shaky Markets

Oyo said in March that it was considering a smaller IPO or possibly even suspending the public offering altogether over market volatility.

Sources told the Economic Times that Oyo would accept a lower valuation of roughly $7 billion to 8 billion. The startup expects to improve its financial performance and will seek to go public after the September quarter, the sources said.

Oravel Stays reportedly said in a letter to SEBI that it wants to include restated financial statements for the six-month periods ending Sept. 30, 2022, Sept. 30, 2021, and Sept. 30, 2020, ET reported.

“Price swings in a newly listed stock create concern among the public. Amongst such sentiments, it will be best to be able to first show to the investors that the business revival is real, it is strong and is leading to much higher bookings and perhaps,” the sources told ET.