Oyo cuts down target price for IPO as tech firm valuations drop

Global hospitality technology major OYO is reducing, by two-thirds, its target share price for its stock-market debut, a decision made by its founder after tech valuations tumbled, a media report said on Monday.

As early as this week, the company plans to file a new initial public offering (IPO) document, according to Bloomberg, citing sources.

Milder than planned

• The company will describe plans in the filing to sell only one-third of the new shares it had intended, reducing the amount of fresh capital it is projected to receive.

• Moreover, the report said, while the tourism market has recovered from the pandemic-era low, OYO, once valued at roughly $10 billion as India's Airbnb equivalent, is still losing money.

• Meanwhile, founder Ritesh Agarwal borrowed billions of dollars to increase his stake in the company.

• This is the SoftBank Group-backed startup's second IPO attempt after India's stock market regulator raised many red flags on its first attempt in late 2021.

Dipping valuations haunt sector

• Technology company valuations have declined since then, as inflation and rising interest rates have reduced customer spending and caused concerns of a recession.

• Further, the report mentioned that no shares will be offered for sale by OYO's current investors.

• SoftBank owns almost half of the firm, which is formally known as Oravel Stays Ltd. and also has backing from Airbnb Inc.

• In 2020, OYO reported consolidated revenue of $951 million for the financial year 2018-19, an over fourfold increase from $211 million as reported in the previous fiscal.

• However, the company's net loss also increased to $335 million, due to a rise in expenses, the company said in a statement.