Key Points of OYO IPO Size Reduce Due to Tech Industry Challenges:
- Oyo Hotels, the Indian hospitality and lodging booking company, is reducing the number of shares it plans to sell in its upcoming initial public offering (IPO) by about two-thirds.
- The move by Oyo’s founder, Ritesh Agarwal, is an attempt to push through the IPO despite weaker terms and declining valuations for technology companies.
- Oyo, which was once valued at around $10 billion, has been hit by mounting losses and financial pressures.
- In its fresh IPO document, Oyo is expected to outline plans to sell just a third of the new shares it originally planned, eroding the amount of fresh capital it is expected to receive.
- The company was targeting a valuation of around $9 billion, but SoftBank later reduced its estimate for Oyo to $2.7 billion.
- An IPO would be a way for Agarwal to prove to Japanese lenders that the founder and his startup are still worth billions.
- Oyo has recast itself as a technology company and moved away from the asset-heavy, capital-intensive model that caused billions of dollars of losses, soured relationships with hotel owners and brought on court battles.
- Oyo’s business has showed signs of recovery after the pandemic hammered the travel and hospitality industry.
Details of OYO IPO Size Reduce Due to Tech Industry Challenges:
Oyo Hotels, the Indian hospitality and lodging booking company, is reducing the number of shares it plans to sell in its upcoming IPO by about two-thirds, according to sources familiar with the matter.
The move by Oyo’s founder, Ritesh Agarwal, is an attempt to push through the IPO despite weaker terms and declining valuations for technology companies. The startup, which was once valued at around $10 billion, has been hit by mounting losses and financial pressures. Agarwal himself has taken on billions of dollars of debt to boost his holding in the firm.
In its fresh IPO document, Oyo is expected to outline plans to sell just a third of the new shares it originally planned, eroding the amount of fresh capital it is expected to receive. The company was targeting a valuation of around $9 billion, but SoftBank later reduced its estimate for Oyo to $2.7 billion. No shares will be offered for sale by Oyo’s current investors, including SoftBank, which holds about half of the startup.
Agarwal and Oyo’s SoftBank-dominated board are said to be pushing for the IPO despite the challenging environment for tech IPOs and high-profile failures by Indian startups in the past 18 months.
An IPO would be a way for Agarwal to prove to Japanese lenders that the founder and his startup are still worth billions. However, Agarwal has been warned that regulators could view his personal debts as an investor risk, which could indefinitely delay or reject the IPO on other technical grounds.
Oyo has recast itself as a technology company and moved away from the asset-heavy, capital-intensive model that caused billions of dollars of losses, soured relationships with hotel owners and brought on court battles.
Agarwal established Oyo in 2013 after dropping out of college and got the backing of SoftBank’s founder, Masayoshi Son, when he was 21. Son has mentored Agarwal and provided personal guarantees for his multibillion-dollar debt. Oyo’s business has showed signs of recovery after the pandemic hammered the travel and hospitality industry.
About OYO:
OYO is a worldwide platform that offers full-stack technology to empower entrepreneurs and small businesses in the hospitality industry. It provides affordable and reliable accommodation options that guests can book instantly, while also increasing earnings and streamlining operations for hosts.
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