SoftBank cuts Oyo valuation to $2.7 billion • CableFree TV

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Peter Kavinsky

SoftBank, Oyo’s biggest backer, has cut its valuation of the Indian hotel chain startup to $2.7 billion despite claims of financial improvement in recent months, a source familiar with the matter said.

The Japanese conglomerate, which previously cut Oyo’s internal valuation to $3.4 billion, further cut Oyo’s valuation by more than 20%, the source said. An Oyo spokesperson said the markdown “has no rational basis.”

Oyo, which also includes Sequoia India and Lightspeed Venture Partners India (both have exited the startup significantly), Airbnb and Microsoft, was valued at around $10 billion in 2019.

According to the startup, SoftBank owns 45% of Oyo. Investors often overestimate or underestimate their portfolio startups. Since SoftBank is Oyo’s largest investor and owns almost half of its shares, the Japanese firm’s valuation is a good sign of the startup’s health.

The startup held a board meeting earlier this month and has not provided any updates on its valuation, nor has it acknowledged or commented on SoftBank’s valuation, according to another person familiar with the matter.

“We are confident that the above assumptions about markdowns are patently wrong. Valuation is the result of business activities. According to our latest audited results, we posted a first profit on an EBITDA basis of Rs 7 crore in the June quarter, with a 41% gross margin and a 45% increase in gross hotel bookings per month compared to the last financial year,” said a spokesperson. Oyo. says in the statement.

“These are vastly improved results and the high performance trajectory is expected to continue. Therefore, there is no rational basis for the markdown.” Bloomberg News first reported the valuation cut.

This revelation comes at a time when Oyo remains months away from going public. An Indian startup earlier this week re-filed for an initial public offering with its local market regulator. The startup initially planned to raise up to $1.16 billion in an IPO at a valuation of up to $12 billion.

This is an evolving story. Further…

Peter Kavinsky

Peter Kavinsky is the Executive Editor at cablefreetv.org

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