Hotel start-up Oyo Hotels is suspending IPO plans until after September to clean up its financial situation and weather market volatility, according to media on Tuesday, May 24, citing unnamed sources with inside information.
Oyo was valued at $9 billion at the start of this year and expected 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 has a 47% stake in the company. Oyo started preparing the files last fall.
Founded in 2015, Oyo is an Indian multinational hotel chain offering spaces in hotels, homes and living spaces. The business model did not come to an end during the global Covid shutdowns.
In 2020, when the pandemic first took hold, SoftBank stepped in and laid off staff and clawed back $75 million it gave to the company earmarked for Oyo’s growth in Latin America. Oyo also shook up its operations in Japan around this time.
See also: Indian start-up Oyo Hotel to target $9 billion valuation in IPO
Oyo’s board, officially called Oravel Stays Ltd., met to discuss the bid and timing changes and also consulted with bankers and investors, the sources told Bloomberg. If Oyo starts the IPO process again before the end of 2022, the first possible IPO would be in 2023, the sources told Bloomberg.
Kotak Investment Banking and Oyo’s other bankers have filed an application with the Securities and Exchange Board of India (SEBI) to update its draft prospectus with the latest financial information after the September quarter close, sources say. Bloomberg.
Read more: Hotel booking firm Oyo eyes smaller IPO in choppy markets
Oyo said in March that it was considering a smaller IPO or perhaps even suspending the public offering altogether due to market volatility.
Sources told the Economic Times that Oyo would accept a lower valuation of around $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 he wanted to include restated financial statements for the six-month periods ending September 30, 2022, September 30, 2021 and September 30, 2020, ET reported.
“The price fluctuations of a newly listed stock cause public concern. Of these sentiments, it will be best if we can first show investors that the recovery in business is real, that it is strong and that it is leading to much higher bookings and maybe,” the sources told AND.