Hotel Booking Firm Oyo Mulls Smaller IPO Amid Shaky Markets

Indian hotel-booking startup Oyo is considering a smaller initial public offering (IPO) or possibly even suspending a public listing altogether as the markets remain volatile and largely in a downswing, Bloomberg reported on Thursday (March 17), citing unnamed sources with insider information. 

Oyo announced in September 2021 that it was planning a public offering in Mumbai to raise about $1 billion. The offering was expected to consist of a fresh issue of shares and an offer for sale from current shareholders.

The startup is operated by its parent company Oravel Stays Ltd. and backed by SoftBank, which owns a 46% stake in the company. 

See also: Indian Hotel Startup Oyo Prepping IPO

The IPO as well as Oyo’s targeted $12 billion valuation could be reduced by half, the sources told Bloomberg. Oyo didn’t immediately respond for comment.

Preliminary filings for the IPO were made by Oyo in September 2021 with plans for an IPO in early 2022, but the draft red herring prospectus (DRHP) hasn’t yet been approved by the Securities and Exchange Board of India (SEBI). So far, none of Oyo’s IPO-related deliberations have moved far enough in the pipeline to be approved by the board or even formally discussed, the sources said.

Read more: India’s Oyo Hotel Startup to Target $9B Valuation in IPO

Founded in 2015 and headquartered in Gurgaon, India, Oyo was thriving until the pandemic hit in 2020 and halted most travel. At the time, Softbank intervened to lay off some of Oyo’s workforce and took back a $75 million investment it gave the firm for further Latin American expansion. Oyo also reduced its operation in Japan at the time, PYMNTS reported.

If Oyo’s IPO terms are significantly adjusted, a new DRHP will have to be filed, one source told Bloomberg. 

See also: IPO Deal Volume Down 60% Compared to ’21

Deal volume is down in 2022 compared to 2021, and more deals are being suspended amid slower economic growth and geopolitical tensions. In January alone, $4 billion worth of SPAC listings were dropped.