IPO-bound Indian unicorn, Oyo Rooms, is looking to raise about $9 billion from the market. The valuation has been reached upon after preliminary conversations with potential investors, according to a Bloomberg report.
The company had filed its initial documents with the Securities and Exchange Board of India (SEBI) for the initial public offering (IPO) in September. Back then, media reports claimed that the start-up, led by 28-year-old Ritesh Agarwal, would be targeting a valuation lower than $12 billion. Later, it was reported that the company would aim for a valuation lower than $10 billion.
According to two persons aware of the development quoted in the Bloomberg report, there are multiple reasons for the company's muted expectations including Oyo’s financial struggles and the decline in tech stocks in the United States.
In Agarwal's words, the COVID-19 pandemic hit the company like a "cyclone". It brought the start-up’s expansion to a sudden halt and forced Agarwal to lay off thousands of employees. According to its documents filed with SEBI, the company recorded a revenue loss of Rs 3,930 crore in the fiscal year ending March 2021, down from Rs 12,800 crore the year before.
However, the IPO of SoftBank-backed Oyo Rooms will be among the biggest since Paytm’s public listing. Oyo's offering is expected to have primary shares (those sold by the company) and a smaller portion of secondary stocks. According to reports, SoftBank will sell a percentage of its shares in the Gurgaon-headquartered company. Currently, Masayoshi Son-led SoftBank, which was an early and enthusiastic backer of Oyo, holds about 47 percent of the equity.
Other major investors in the company, founded in 2013, are Sequoia Capital, Lightspeed Ventures and Greenoaks Capital Management. None of them plan to sell their stakes in the proposed IPO.
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(Edited by : Thomas Abraham)
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