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Former $10 billion Indian startup Oyo seeking 70% discount on fresh capital.

Oyo, the Indian budget-hotel chain startup, is currently in talks with investors to secure additional funding. According to three sources familiar with the matter, this new round of funding may result in a lower valuation for the Indian firm, potentially reaching $3 billion or less.

The startup is in discussions with investors, including Malaysia’s sovereign wealth fund Khazanah, for the new funding, according to anonymous sources familiar with the matter. According to sources, the upcoming funding round may involve some secondary transactions, potentially resulting in a valuation of the startup as low as $2.5 billion.

If the proposed terms come to fruition, they would signify a significant decrease from Oyo’s peak valuation of $10 billion during their funding round in 2019. A valuation below $3 billion would also be less than the capital Oyo has raised through equity and debt financing.

The discussions regarding the new funding are still in progress, and it’s important to note that the terms may be subject to change or the funding round may not happen, as per the sources’ caution.

It’s not surprising to see a decrease in value. In 2022, SoftBank, the majority owner of Oyo, made an internal adjustment to the valuation of the Indian startup, bringing it down to $2.7 billion. Oyo claimed that there was no logical reason for the decrease in its valuation.

Oyo, with support from SoftBank, Airbnb, Peak XV Partners, and Lightspeed Venture Partners, dismissed the “rumours,” stating that there was no solid transaction. Khazanah did not provide a response when asked for a comment. We have not previously disclosed the details regarding the proposed valuation.

“We strongly refute any rumours, including those regarding the valuation mentioned in the article. Oyo remains committed to improving performance and increasing earnings. “The company occasionally interacts with respected investors when approached, but there are currently no specific transactions or discussions about valuation at this stage,” a company spokesperson stated.

According to a source, Oyo has withdrawn its draft red herring prospectus for an initial public offering for the second time, leading to discussions about new funding. The Indian startup initially submitted the necessary documents to go public in 2021, aiming to raise approximately $1.2 billion with a valuation of $12 billion at that time.

India’s market regulator, SEBI, has not approved the startup’s application for an IPO.

As per reports from local media, Ritesh Agarwal, the founder and CEO of Oyo, informed the employees that the company anticipates revenue exceeding $682 million for the fiscal year ending in March.

Juliet P.
Author: Juliet P.

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