SoftBank, the largest investor in Oyo Hotels & Homes, has cut its internal valuation of the hospitality startup to $2.7 billion at a time when Oyo has filed fresh documents with the market regulator for its proposed initial public offering.
The Japanese investor’s latest valuation of Oyo – as of June quarter – is based on comparison to similar firms in the public markets, people aware of the matter said.
This is more than 20% drop from the earlier valuation at about $3.4 billion. SoftBank’s internal valuation estimates are not made public.
A spokesperson for Oyo, however, said, “Speculation about valuation markdown is patently incorrect.”
When contacted by ET, SoftBank declined to comment.
Oyo was last valued at $9.6 billion valuation when it raised strategic
investment from Microsoft in September last year.
SoftBank is listed as a promoter of Oyo with stockholding of over 46% stake,
as per draft IPO papers filed with the markets regulator Securities and Exchange Board of India (Sebi) last October.
Denying any valuation markdown, Oyo in a statement said, “Valuation is an outcome of business performance. As per our latest audited results, we have clocked Rs 7 crore of maiden adjusted Ebitda profit in the June quarter, at 41% gross profit margin and a 45% increase in gross booking value per hotel per month vs last financial year.” This indicates a significant recovery in its business since Covid-19 outbreak severely hurt the travel and hospitality sector.
“There is no rational basis for a markdown,” Oyo added.
Sources cited above said Oyo may settle for a valuation of around $5 billion in its IPO after it receives Sebi’s clearance.
The company spokesperson said, “We have not decided the exact timing for the IPO and the IPO valuation is also highly speculative.”
ET had reported in February that Oyo’s planned public issue will be reduced in size compared to its initial plan to raise a little over $1 billion.
While Oyo initially was looking at a valuation of over $9-12 billion late last year, it had readjusted expectations to about $7 billion following change in market sentiments along with additional scrutiny of new-age businesses, ET had reported.
Oyo is yet to secure the regulator’s nod for its IPO, but the company said Sebi has given it the permission to file updated and audited financials till the September quarter and will initiate the review of its application after that.
Besides SoftBank, Oyo’s founder Ritesh Agarwal is a promoter of the company with a stake of around 33%. Both of them will continue to be promoters after the listing, as per Oyo’s draft red herring prospectus (DRHP).
Lightspeed Venture Partners, Sequoia Capital and Airbnb are among Oyo’s other investors.
Newswire Bloomberg first reported about the slash in valuation for Oyo by SoftBank.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
Denial of responsibility! NewsBit.us is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
