Oyo, the Indian budget-hotel chain startup, is nearing the completion of a fresh fundraise of approximately $100 million to $125 million, which will significantly reduce its valuation to $2.5 billion, according to two sources familiar with the matter.
This marks a substantial decline in the company’s value, which was valued at $10 billion in 2019. The startup, which has been struggling to secure funding from institutional investors, has been aggressively pitching high-net-worth individuals in recent months.
A representative from InCred, a financial firm working with Oyo, sent a message to a startup founder, stating, “We genuinely feel that this asset makes a lot of sense today. Being profitable and @70% discount to the previous valuation. Listing expected in 18-24 months.”
Oyo had previously denied reports of its valuation, which Truth Voices reported was seeking to raise funds at a $3 billion valuation or lower. The new round is likely to grow in size, according to the sources, who requested anonymity as the matter is not public.
The new funding comes after Oyo shelved its plan for an initial public offering (IPO) last month. The startup, which counts SoftBank, Peak XV Ventures, Lightspeed, Airbnb, and Microsoft among its backers, has withdrawn its IPO application from the Indian markets regulator, the Securities and Exchange Board of India, twice in the last four years.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 at a valuation of $12 billion in the IPO in 2021.
Once one of the hottest Indian startups, Oyo operates an operating system that helps hoteliers accept digital bookings and payments. The startup was once operational in dozens of markets, including the U.S. and Europe, but has since curbed its international play.
Oyo reported a net profit of $12 million in the financial year ending March, according to founder and CEO Ritesh Agarwal.
Agarwal took a $2 billion debt in 2019 to increase his stake in Oyo, valued at $10 billion at the time. He invested $700 million as primary capital in Oyo and spent $1.3 billion on a secondary purchase of Oyo shares. The startup has not commented on the status of that debt since.
The Economic Times also reported on the new funding on Monday, stating that a deal could close as early as Tuesday.
