India’s Oyo, once valued at $10 billion, is seeking fresh funding at a 70% discount

Oyo, the Indian budget hotel chain startup, is in talks with investors to raise a new round of financing that could bring the Indian company’s valuation down to $3 billion or lower, three sources familiar with the matter told TechCrunch.

The startup is in contact with investors, including Malaysia’s sovereign wealth fund Khazanah, for fresh funding, said the sources, who requested anonymity because the matter is private. The new funding round is also likely to see some secondary transactions that will value the startup at as much as $2.5 billion, the sources added.

The proposed conditions, if realized, would represent a precipitous drop from peak value of $10 billion on which Oyo raised a round of funding in 2019. A valuation of $3 billion or less would also be lower than the amount of capital Oyo has raised in equity and debt over the years.

Considerations for new financing are ongoing, and its terms could still change or the round may not materialize, the sources warned.

The devaluation is not a surprise. SoftBank, which owns more than 40% of Oyo, internally reduced the Indian startup’s valuation to $2.7 billion in 2022. Oyo said at the time that there was «no rational basis» for downgrading its estimate.

Oyo – which counts SoftBank, Airbnb, Peak XV Partners and Lightspeed Venture Partners among its backers – disputed the «rumours», claiming there was no «concrete transaction». Khazanah did not respond to a request for comment. The terms of the proposed assessment have not been previously published.

“We deny any rumours, including the one about the assessment in the article. Oyo remains focused on better performance and higher earnings and contacts valued investors from time to time when approached, but there is no concrete transaction let alone valuation discussions at this stage,” said a company spokesperson.

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The discussions on the new financing come after Oyo withdrew its draft prospectus for the initial public offering for the second time, the source said. The Indian startup initially filed for an IPO in 2021, seeking to do so raise about 1.2 billion dollars at an estimate of $12 billion at the time.

India’s market regulator, SEBI, has not approved the startup’s application for an IPO.

According to local media, Oyo founder and CEO Ritesh Agarwal told employees that the company expects revenue for the fiscal year ending in March. more than 682 million dollars.

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