India’s Oyo, once valued at $10 billion, finalises new funding at $2.5 billion valuation

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Indian budget hotel chain startup Oyo is finalizing a fresh fundraise of about $100 million to $125 million, which would bring its valuation to $2.5 billion, two people familiar with the matter told TechCrunch.

This is a massive drop in the value of the Gurgaon-headquartered startup, which was valued at $10 billion in 2019. The startup, which has been struggling to raise funds from institutional investors, has been aggressively courting high-net-worth individuals in recent months.

“We really think this asset makes a lot of sense today. It is profitable and 70% below previous valuations. Expect listing in 18-24 months,” a representative from InCred, a financial firm that works with Oyo, said in a message to a startup founder (seen by TechCrunch).

TechCrunch reported early last month that Oyo was looking to raise funds at a valuation of $3 billion or less. At the time, Oyo strongly denied “rumors including the valuation.” The size of the new round is likely to be large, said the above sources, who requested not to be named as the matter is not public.

This new funding comes after Oyo shelved its IPO plans last month. The startup – whose backers include SoftBank, Peak XV Ventures, Lightspeed, Airbnb and Microsoft – has withdrawn its IPO application from Indian market regulator Securities and Exchange Board of India twice in the past four years.

Oyo had initially filed paperwork with Sebi in 2021 for a public listing but withdrew it and refiled in 2023. The firm, which has raised over $3 billion to date, sought to raise $1.2 billion in an IPO in 2021 at a valuation of $12 billion.

Once one of the most popular Indian startups, Oyo operates a one-of-a-kind operating system to help hoteliers accept digital bookings and payments. The startup was once operating in dozens of markets, including the US and Europe, but has since curtailed its international business.

The company posted a net profit of $12 million in the fiscal year that ended in March, according to founder and chief executive Ritesh Agarwal.

Aggarwal took out $2 billion in debt in 2019 to increase his stake in Oyo, which was valued at $10 billion at the time. He invested $700 million in Oyo as primary capital and spent $1.3 billion on secondary purchases of Oyo shares. The startup has not commented on the status of that debt since then.

Indian newspaper Economic Times also reported the new financing on Monday and said the deal could be completed as soon as Tuesday.

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