India's budget hotel chain startup Oyo is in talks with investors for a new funding round that could value the Indian company at less than $3 billion, three people familiar with the matter said. A source told TechCrunch.
The startup is working with investors including Malaysian sovereign wealth fund Khazanah to raise new funding, the people said, asking not to be identified as the matter is private. . The new funding round could also result in a secondary deal that could value the startup at around $2.5 billion, the people added.
If the proposed terms come true, it would represent a significant drop from Oyo's peak valuation of $10 billion when it raised capital in 2019. Also, if the valuation is less than $3 billion, it will be lower than the amount of capital raised by Oyo. Equity and debt over the years.
Discussions for new financing are ongoing and terms could still change or the round may not materialize, the people warned.
The reduction in valuation is not surprising. SoftBank, which owns more than 40% of Oyo shares, has internally lowered the valuation of the Indian startup to $2.7 billion in 2022. Oyo said at the time that there was “no rational basis” for the lower valuation.
Oyo (which counts SoftBank, Airbnb, Peak XV Partners and Lightspeed Venture Partners among its backers) disputed the “rumours” and claimed there was no “concrete deal”. Khazanah did not respond to requests for comment. Terms of the proposed valuation were not previously reported.
“Oyo refutes all rumors, including the valuation in the article. Oyo remains focused on improving performance and increasing profitability, and we are open to dialogue with respected investors if they approach us. “At this stage, there are no discussions regarding valuation, and no specific transactions have taken place,” a company spokesperson said.
According to people familiar with the matter, consideration for new funding came after OYO withdrew its draft prospectus for an initial public offering for the second time. The Indian startup initially filed paperwork to go public in 2021, aiming to raise about $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 CEO Ritesh Agarwal told employees that the company expects sales of more than $682 million for the fiscal year ending in March. He said he was there.