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The Indian hotel chain, led by one of the country’s most ambitious young entrepreneurs and supported by SoftBank (SFTBF), filed an initial public offering in Mumbai on Friday. It seeks to raise up to 70 billion rupees (around $ 944 million) through the sale of new shares, while giving the option to existing investors to sell some of their shares up to 14.3 million. billion rupees ($ 193 million).
The money will be used to pay off part of OYO’s debts and seek new growth opportunities, the company said in a statement.
OYO – officially called Oravel Stays Limited – was founded in 2012 by then 19-year-old student Ritesh Agarwal as a platform to book budget hotel rooms across India. It has since expanded to renting and franchising its own properties and now has over 157,000 rooms. in 35 Asian countries, Europe and United States.
For years, the company enjoyed a reputation as a top-flight startup that seemed unstoppable. In 2019, he said he was adding rooms to his system faster than the world’s three largest hotel chains combined and aimed to become “the world’s largest and most preferred hotel chain.”
Since then, however, the Indian upstart has stumbled as he faces questions about his ability to make money and support growth. These problems were exacerbated by the faltering confidence in bets placed by its biggest funder, SoftBank – which took a hit after WeWork’s failed IPO – as well as the economic impact of the coronavirus pandemic.
Last January, OYO announced layoffs, saying it must prioritize profitability, long-term growth and stronger corporate governance, among other goals. He revealed in a prospectus on Friday that he had yet to make a profit.
The company has also been reduced to other dimensions. According to a person familiar with the matter, it was recently privately valued at $ 9 billion. This is down from a previous valuation of $ 10 billion in 2019.
Still, he continues to boast a range of reputable investors, including SoftBank’s Vision Fund, which owns nearly 47%. Agarwal personally owns around 8%, while Sequoia Capital and Airbnb (ABNB) also remain donors.
OYO recently entered into a major partnership with Microsoft (MSFT), which will allow its hoteliers to use the software publisher’s cloud technology and artificial intelligence. The companies are also planning to create so-called “smart room” experiences, which would provide customers with self-check-in and virtual customer service options.
SoftBank has called on its portfolio companies to go public, with CEO Masayoshi Son recently describing IPOs as the “harvest” of “golden eggs.”
OYO did not specify a timetable for its listing in its prospectus. But he plans to make his debut by the end of the year, according to a person familiar with the matter.
– Rishi Iyengar contributed to this report.
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