A humbled Oyo will keep trying for an IPO, but it will have to wait awhile longer.
Oyo requested permission from India regulators to update its IPO prospectus with newer financial results, which means its stock market debut couldn’t take place until late 2022 at the earliest, according to a source.
The volatility of global stock markets, the outbreak of the Russia-Ukraine war, a bevy of lackluster IPOs in India, and a travel recovery in India muted by Omicron early in the year certainly contributed to the delay, and the prospect that Oyo wouldn’t have received anything near the valuation it sought.
As of this writing, Oyo’s Draft Red Herring Prospectus, filed September 30, 2021 was still “in process,” according to the Securities and Exchange Board of India’s latest filings, but the next move after receiving permission to provide an update would be up to Oyo.
The board is expected to OK within the next week or two Oyo’s request to add an addendum to its prospectus, and then the hotel and vacation rental operator and booking business would have to decide whether it would add its full-year fiscal year 2022 results through March 31 or wait to include its first quarter 2023 results through June 30, as well, the source said.
Oyo’s latest publicly disclosed financial results are for fiscal year 2021, which ended March 31, 2021.
It would likely take several months after Oyo submits its addendum for the board to approve or reject the prospectus, and then Oyo would have one year after regulatory approval to debut on the stock market. Oyo is seeking to raise $1 billion in the IPO.
Given the volatility of global stock markets, Oyo could potentially make an IPO attempt in late 2022 or more likely sometime in 2023, depending on market conditions.
Bloomberg reported Thursday that Oyo decided to shelve the IPO — most likely until 2023 — after discussions with the company’s bankers, as the board of the Softbank-backed company decided the timing wasn’t right for a public listing.
However, the IPO process is still under way, albeit delayed, and there has been no board vote to derail a public listing.
The India-based budget hotel operator and aggegator filed its IPO paperwork with India regulators on September 30, 2021, proposing a $10 billion to $12 billion valuation, and was looking at a $9 billion valuation three months later in January 2022, but the IPO has been in limbo since then.
Since filing its IPO paperwork in September, several IPO debuts in India have been financially disastrous or come under acute pressure.
Ritesh Agarwal, who founded the company in India in 2013 as a budget hotel booking site and operator, saw the company expand throughout India, Southeast Asia, Europe, China and the U.S. prior to the pandemic. But the company ran into tech and operational problems, which led to pushback from many hotel owners that it contracted with, even before the pandemic, and Oyo started restructuring in late 2019.
During the pandemic, Oyo, which had acquired property manager @leisuregroup in Amsterdam in 2019, transitioned into a much more homes-heavy company, especially in Europe, as many hotel relationships fell by the wayside. In July 2021, Oyo disclosed that it would be downgrading its presence in the U.S. and China so the company could focus on India, Southeast Asia and Europe.
Unlike Oyo, Airbnb is totally dropping out of the Chinese domestic market, CNBC reported this week.
Oyo has not commented publicly on the status of its IPO.
On the company blog on April 21, Oyo said it notched 800,000 bookings that week, a high point up to that point in 2022. The company attributed that mark to new app features such as enabling guests to pay at the hotel upon arrival instead of having to pre-pay for rooms when they book.
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Photo credit: Oyo founder and CEO Ritesh Agarwal. The company has scuttled its plan to do an IPO for now, according to a published report. Akio Kon / Bloomberg