Once Valued at $10B, Oyo Raises New Funding At $2.5B Valuation.

After withdrawing their recent IPO, now the Indian Hospitality Start-Up OYO is planning to seek fresh funds of Rs 1,000 crore. Primarily from the family offices of prominent Indian corporates and Stock Market Experts.

This funding will be backed by people like former Reliance Industries senior executive Anand Jain, Mankind Pharma promoter brothers Ramesh and Rajeev Juneja, as well as Utpal Sheth. All the close aids of Late Market Maverick Rakesh Jhunjhunwala.

Oyo’s Fresh Funding Plans

Apart from the above fund sources, the hotel aggregator is in the final stage of negotiations with Khazanah Nasional, a Malaysian sovereign wealth fund. However, they are looking for certain rights before finalizing their investment.

Oyo Valuation Dropped From $9B To $2.5B In 3 Years.

The proposed round is expected to be valued at $2.5 Billion Valuation. This is a 72% fall from $9 Billion in 2021 following this round. This is a significant down round for the start-up backed by SoftBank.

Struggling to attract institutional investors, now Oyo has been pitching to high-net-worth individuals for funding.

What Are The Reasons For Downfall Of Oyo?

OYO has been facing many challenges since 2020 and 21. The Major were:

The COVID-19 pandemic severely affected the travel and hospitality industry. Thus reducing demand for such services and forcing businesses to shut down or reduce their capacity.
Oyo was alleged for fraud and mismanagement, breach of contract, and nonpayment issues. Some of their partners alleged changing terms of agreements and data manipulation.
Oyo faced regulatory hurdles or legal disputes in markets like China, India, Japan, and the US. The start-up faced a major backlash from accommodation owners over unfair fee increases.
Internal issues and layoffs led to further disruption in Oyo’s operations as they tried to cut down costs and streamline their operations in 2020 and 2021. Several executives resigned.

What Happened To Oyo IPO?

Oyo filed their IPO papers but withdrew them on May 24. This is the second time Oyo has withdrawn its IPO in the last 3 years. The reason for such withdrawal was not immediately clear from their SEBI Filings. However, a source close to the matter said the firm is close to finalizing a refinancing plan and is looking to raise $350 million to $450 million through bond issuance.

"The refinancing will result in material changes to Oyo's financial statements. Hence as per existing regulations, it will need to revise its filings with the regulator," the source said.

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