Oyo, once valued at $10 billion, shelves Initial Public Offering plans for second time

In a significant setback for one of India’s most well-known startups, Oyo has decided to postpone its initial public offering (IPO) plans for the second time. The decision to shelve listing plans comes after the SoftBank-backed hotel chain’s valuation dropped sharply from its peak of $10 billion in recent months.

Founded in 2013, Oyo rapidly expanded its network of budget hotels across India and international markets like China, Europe and Southeast Asia. However, business took a major hit during the pandemic as travel restrictions depleted occupancy rates. While recovery is underway, the road ahead remains bumpy with new variants posing uncertainty.

Sources with direct knowledge of the matter said that prevailing rough market conditions made this the right time for Oyo to avoid a public debut. The company stated it will continue focusing on product improvements and consistent operating performance over the next few quarters before reassessing listing viability. Global macro factors like high inflation, rising interest rates and geopolitical tensions have rattled investors’ appetite for risk.

It is noteworthy that Oyo saw over 60 percent of its valuation erased last year alone. Confirmed reports of layoffs and losses made investors skeptical about its rapid growth story. With questions around profitability timelines, capital efficiency and true asset ownership still lingering, bankers suggested the IPO climate is unsuitable presently.

Oyo plans on strengthening unit economics, controlling costs tightly and showing profitability progress when macro headwinds hopefully settle. The company remains committed to transparency with shareholders and creating long-term value for stakeholders through a renewed public market strategy at an appropriate juncture.