Softbank, Oyo’s biggest backer, has lowered the valuation of the Indian hotel chain’s startup to $2.7 billion in recent months, despite claims of improved financials, a person familiar with the matter said.
The Japanese conglomerate, which had previously cut Oyo’s internal valuation to $3.4 billion, cut Oyo’s value by more than 20 percent, the person said. Oyo spokesman Mark said the takedown had “no logical basis”.
Oyo – which also counts Sequoia India and Lightspeed Venture Partners India (both of which have made significant exits since the start), Airbnb and Microsoft – were valued at around $10 billion in a single round in 2019.
SoftBank owns 45% of Oyo at its inception. It is not uncommon for investors to mark up or mark down the value of their portfolio startups. As SoftBank is OYO’s largest investor and owns about half of it, the Japanese company’s valuation is a good sign of the startup’s health.
The startup held a board meeting earlier this month and did not make any revisions to the valuation or acknowledge or comment on SoftBank’s valuation, another person familiar with the matter said.
“We are convinced that the above speculations about the decline of the valuation mark are seriously wrong. Value is the result of business performance. As per our latest audited results, we have recorded 7 cr maiden adj EBITDA profit in the June quarter, 41% gross profit margin and 45% month-on-month growth in hotel gross bookings compared to last fiscal year,” an Oyo spokesperson said in a statement.
“These are impressively improved results and the strong performance trajectory is expected to continue. Therefore, there is no reasonable basis to mark down,” Bloomberg News first reported on the price cut.
The revelation comes months before Oyo goes public. The Indian startup filed its initial public offering application with the local market regulator earlier this week. The startup originally planned to raise between $1.16 billion and $12 billion in an IPO.
This is a developing story. To follow more…