SoftBank Slashes Valuation Of IPO-Bound Oyo By 20 Per Cent To $2.7 Billion: Report

SoftBank cut its estimated value for Oyo to $2.7 billion in the June quarter from an earlier $3.4 billion after benchmarking it against peers with similar operations

SoftBank Group Corp. has cut Oyo Hotels’ valuation on its books by more than 20 per cent, quoting sources, Bloomberg reported on Thursday.

According to the sources privy to the development, the Japanese investor, the largest shareholder in the hotel-booking firm, slashed its estimated value for Oyo to $2.7 billion in the June quarter from an earlier $3.4 billion after benchmarking it against peers with similar operations. Oyo had reached a valuation of $10 billion in a 2019 funding round.

SoftBank declined to Bloomberg’s request for comment, while Oyo said the news on the valuation cut was speculative and incorrect. “We are confident that the above speculations about valuation markdown are patently incorrect ... we have not decided the exact timing for the IPO and the IPO valuation is also highly speculative,” an OYO spokesperson said.

Oyo, formally known as Oravel Stays Ltd., filed a fresh round of financial documents with India’s market regulator on Monday as it plans for a stock-market debut after cost cuts and recovery in travel helped it reduce losses. The company expects approval from the Securities and Exchange Board of India (Sebi) for the public debut soon and aims to tap the market at a valuation of about $5 billion early next year, sources said. Oyo’s deliberations about its IPO aren’t final and its plans could still change, depending on market conditions.

The start-up was targeting a valuation of about $9 billion in its IPO after preliminary conversations with potential investors, Bloomberg News reported in January. In its preliminary filing in September last year, the company had said it planned to raise $1 billion through the sale of new shares and those held by existing investors.

Oyo said it was confident that its valuation shouldn’t have been marked down given its recovering business performance, adding that it hadn’t decided on the timing for an IPO.

“We are confident that the above speculations about valuation markdown is patently incorrect. Valuation is an outcome of business performance,” the start-up said in a statement. “We have not decided the exact timing for the IPO and the IPO valuation is also highly speculative.”

In the latest filings, Oyo clocked narrower losses and a rebound in sales for the year through March 2022 and the following three months. It reported a loss of Rs 1,890 crore for the year through March 2022, nearly halving from the previous 12 months.