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Oyo Takes Step Toward Initial Public Offering


oyo rooms

Skift Take

It's clear that Oyo will try to go public in some fashion. But will investors buy the story — and the shares?

Despite the ravages of the pandemic, it’s long been a question of when — rather than if — Oyo would seek to go public, and now the budget hotel-room seller and operator has hired bankers to get it there.

Citing multiple sources, Money Control reported that Softbank-backed Oyo recently hired JP Morgan, Kotak Mahindra Capital and Citi for what would initially be a $1.2 billion share sale.

Oyo is leaning toward a public offering in its home base of India, according to the report. That’s not surprising since Oyo founder and CEO Ritesh Agarwal, who’s a major shareholder in the enterprise, hinted that could be the route in early July, citing a flurry of recent initial public offerings in India.

The $1.2 billion initial share sale could be just that — initial — since Oyo has raised $4.1 billion in funding and debt financing since its founding in 2013. Oyo, which recently dropped China and the U.S. as focus markets in favor of India, Southeast Asia and Europe, has reportedly been in funding talks with Microsoft in what could be a cloud deal that valued Oyo at around $9 billion, according to published reports.

Oyo wouldn’t comment about Microsoft and didn’t immediately respond to a request for comment about its hiring of bankers to pursue an initial public offering.

There has been a ton of news recently about online travel or lodging startups going public, including through special purpose acquisition companies, or SPACs. Among them are Vacasa, Sonder, Grab, and Traveloka.

Oyo was decimated at the beginning of the pandemic, when bookings fell 66 percent in 30 days in April 2020, but the company was talking about a business recovery when Covid crunched India starting in October 2020.

With its turn toward India, Southeast Asia and Europe, and in light of its $415 million acquisition of @Leisure Group in 2019, Oyo is believed to have tilted somewhat toward the short-term rental side of the lodging equation.

Oyo was having problems even before the pandemic and carried out several restructurings around the world. Hotel owner/partners complained about unkept promises and payments, a lack of control over pricing, and technology that fell short of what could be expected from a modern hotel operator.

On the technology front, Oyo has told employees and operators that it has worked very hard over the last year to improve its reservations and back-office systems. But Oyo will have to prove to investors that it is far different than Softbank-stablemate WeWork, which like Oyo, portrayed itself as a cutting-edge technology company but crumbled when it tried to go public.

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