Oyo, the Indian budget hotel chain, is facing yet another setback as it withdraws its IPO application from the Securities and Exchange Board of India (SEBI) for the second time. This move deals a fresh blow to the company’s already diminished ambitions and raises questions about its readiness to face public scrutiny.
At its peak, Oyo commanded a valuation of $10 billion, but it has since faced numerous challenges. The startup initially filed paperwork with SEBI in 2021 for a public listing but later withdrew it and refiled in 2023. However, SEBI has yet to approve either of Oyo’s applications, casting doubt on the company’s ability to meet the regulatory requirements.
Oyo has been struggling to secure a new round of funding at a valuation of $3 billion or less. Reports earlier this month indicated that the company was looking to raise capital at a significantly lower valuation than its previous peak. Oyo had denied these claims, but sources now suggest that it is attempting to raise funds at a valuation as low as $2 billion to $2.3 billion.
This downward revision in valuation reflects the challenges that Oyo has faced in recent years. Once hailed as a disruptor in the budget hotel industry, the startup has come under fire for its business practices. In 2020, it was forced to lay off thousands of employees in an effort to cut costs.
Despite its setbacks, Oyo still boasts an impressive list of backers, including SoftBank, Peak XV, Lightspeed, Airbnb, and Microsoft. These investors have contributed over $3 billion in equity and debt to the company thus far. However, their continued support may be contingent on Oyo’s ability to navigate its current challenges and regain its footing in the market.
The decision to withdraw its IPO application for the second time underscores the need for Oyo to reassess its strategy and address the concerns raised by regulators and investors. The company must demonstrate its ability to navigate the public market and regain investor confidence. Only then can it hope to secure the necessary funding to support its growth and overcome the obstacles that have hindered its progress thus far.
In conclusion, Oyo’s decision to withdraw its IPO application for the second time is a significant setback for the once high-flying Indian budget hotel chain. The company now faces the challenge of regaining investor confidence and securing funding at a lower valuation. To succeed, Oyo must address the criticisms leveled against it and demonstrate its ability to navigate the public market successfully. Only then can it hope to regain its status as a disruptor in the industry and overcome the hurdles that have impeded its growth.