SoftBank-backed Indian hospitality tech startup Oyo to file for $1.2 billion IPO next week

Oyo Hotels and Rooms, a SoftBank-backed Indian hospitality startup with $335 million in losses, is expected to file for an initial public offering (IPO) next week to raise around $1 billion, according to a report from Reuters, citing a source familiar with the matter.

The sources told Reuters that the embattled startup is looking to list in India’s financial capital of Mumbai and its IPO is tentatively pegged at between $1 billion and $1.2 billion. The IPO will consist of a fresh issue of shares and an offer for sale from existing shareholders, Reuters added. The company did not immediately respond to a request for comment. Kotak Mahindra Capital, JP Morgan, and Citi are the bankers advising the company on the IPO.

Oyo has faced series of setbacks in recent years including months of layoffs, cost cuts, and losses during the global health crisis. In January 2020, about two months before the pandemic even started, the budget hotel chain startup laid off about 2,000 of its employees in China and India. Then in February 2020, its annual net loss widened to $335 million due to China’s expansion.

Struggling to stay afloat, the company received a $5 million capital infusion from Microsoft Corp. Meanwhile, Japanese conglomerates SoftBank still owns a 46% stake in the company.

Founded in 2013 by Ritesh Agarwal, Oyo started mainly as a group of budget hotels. Oyo is now the world’s third-largest and fastest-growing hospitality chain of leased and franchised hotels, homes, and living spaces. Over a span of six years, the startup expanded its footprint globally with thousands of hotels, vacation homes, and millions of rooms in hundreds of cities in India, Malaysia, UAE, Nepal, China, Brazil, UK, Philippines, Japan, Saudi Arabia, Sri Lanka, Indonesia, Vietnam, the United States and more.

Oyo backers include SoftBank Group, Greenoaks Capital, Sequoia India, Lightspeed India, Hero Enterprise, Airbnb, and China Lodging Group. OYO has raised a total of $3.2 billion in funding over 15 rounds. Its latest funding was raised on December 10, 2019, from a Series F round.