SoftBank, Oyo’s biggest backer, has cut the Indian hotel chain startup’s valuation to $2.7 billion in recent months, despite claims of better finances, a person familiar with the matter said.
The Japanese conglomerate, which earlier cut Oyo’s intrinsic value to $3.4 billion, reduced Oyo’s value by more than 20%, the person said. An Oyo spokesman said the markdown had “no rational basis”.
Oyo – which includes Sequoia India and Lightspeed Venture Partners India (both of which have taken significant exits from the startup), Airbnb and Microsoft, valued at around $10 billion in a round in 2019.
Softbank owns 45% stake in Oyo, according to the startup. Investors rarely markup or markdown the valuation of their portfolio startups. As SoftBank is Oyo’s largest investor and owns nearly half of it, the Japanese firm’s assessment is a good sign of the startup’s health.
The startup held a board meeting earlier this month and did not share any updates on its valuation or accept or comment on SoftBank’s estimate, according to another person familiar with the matter.
“We believe the above speculation about a valuation markdown is very wrong. Valuation is the result of business performance. As per our latest audited results, during the June quarter, we posted Rs. 7 crore maiden adj EBITDA profit, 41% gross profit margin and 45% increase in gross booking value per hotel per month compared to last fiscal year,” an Oyo spokesperson said. said in a statement.
“These are dramatically improved results and the strong performance trajectory is expected to continue. Therefore, there is no rational basis for the markdown. Bloomberg News first reported the valuation cut.
The announcement comes as Oyo is months away from going public. The Indian startup refiled its initial public offering application with the local market regulator earlier this week. The startup originally planned to raise up to $1.16 billion in the IPO at a $12 billion valuation.
This is an evolving story. More to follow…