India’s Oyo, once valued at $10 billion, seeks new financing at 70% discount

Oyo, the Indian budget hotel chain startup, is negotiating with investors to raise a new round of funding that could reduce the Indian company’s valuation to $3 billion or less, three told TechCrunch sources close to the case.

The startup is signing up investors, including Malaysian sovereign wealth fund Khazanah, for the new funding, the sources said, requesting anonymity because the matter is private. The new funding round is also expected to result in secondary transactions that will value the startup at just $2.5 billion, the sources added.

The proposed terms, if they come to fruition, would represent a sharp drop from the peak valuation of $10 billion at which Oyo raised a funding round in 2019. A valuation of $3 billion or less would also be below the amount of the capital that Oyo raised against. equity and debt over the years.

Deliberations for the new funding are ongoing, and its terms could still change, or a round may not materialize, the sources warned.

The sudden drop in valuations is hardly a surprise. SoftBank, which owns more than 40% of Oyo, internally reduced the Indian startup’s valuation to $2.7 billion in 2022. Oyo said at the time that there was “no rational basis » for the drop in its valuation.

Oyo – whose backers include SoftBank, Airbnb, Peak XV Partners and Lightspeed Venture Partners – disputed the “rumours”, saying there had been no “concrete transaction”. Khazanah did not respond to a request for comment. The terms of the proposed assessment have not been previously reported.

The deliberations for the new financing follow Oyo’s withdrawal of its draft red herring prospectus for an IPO for the second time, a source said. The Indian startup initially filed the paperwork to go public in 2021, seeking to raise around $1.2 billion at a valuation of $12 billion at the time.

Indian market regulator SEBI has not approved the startup’s IPO application.

According to local media, Oyo founder and chief executive Ritesh Agarwal told employees that the company expected revenue for the financial year ending in March to exceed $682 million.