Indian hotel start-up Oyo prepares for IPO
Despite a difficult year due to COVID-related travel restrictions, Oyo Hotels and Rooms is preparing to file an Initial Public Offering (IPO) to raise around $ 1 billion.
The Indian hospitality startup is set to file its IPO next week in Mumbai, with a bid that could be between $ 1 billion and $ 1.2 billion, Reuters reported on Thursday (September 23), citing a source. The offer will consist of a new issue of shares and an offer to sell from current shareholders, the source said. Oyo, which is backed by SoftBank, did not immediately respond to requests for comment, Reuters reported.
The outlet noted that this list follows other high-profile debuts including food delivery company Zomato Ltd, Berkshire Hathaway-backed Paytm and TPG-backed private equity firm Nykaa. Another SoftBank-backed company, ridesharing company Ola, is also set to go public.
Read more: Oyo Hotels cuts staff in Latin America, looks to other markets
Oyo’s business model is turnkey: in exchange for room prices and bookings, independent hotel owners receive a portion of the revenue and fees that are collected, provided they agree to rebrand by as a hotel Oyo.
The company’s business model flourished at first, but ran into a problem due to COVID-19 travel restrictions in 2020. Last September, SoftBank – which owns a 46% stake in Oyo – stepped in and laid off staff, while taking back $ 75 million that had been earmarked for Oyo’s growth in Latin America. Oyo scaled back its operations in Japan around the same time.
In February this year, Oyo announced that it would lay off almost all of its staff in Latin America and cut funding as it moved to a digital-only model in that region.
Oyo said at the time that he was looking to promising areas for growth, such as India, Southeast Asia and Europe.
According to Reuters, Oyo founder and chief executive Ritesh Agarwal said in July that the company would likely return to levels it reached before India’s second wave of COVID-19 infections and “would develop from of the”.