SoftBank, Oyo’s largest lender, has cut the Indian hotel chain’s valuation to $2.7 billion, despite the startup claiming it has improved its finances in recent months, said a person familiar with the matter.
An Oyo spokesperson said the price cut “is not a rational basis”.
Oyo – which also includes Sequoia India and Lightspeed Venture Partners India (both of which have made significant strides in the startup), Airbnb and Microsoft, was valued at around $10 billion in a round in 2019.
SoftBank owns 45% of Oyo, according to the startup. It’s not rare for investors to upgrade or downgrade the valuation of their portfolio startups. Given that SoftBank is Oyo’s largest investor, owning nearly half of that, the Japanese company’s assessment is a good signal for the startup’s health.
The startup held a board meeting earlier this month and did not share any updates on the valuation, nor acknowledge or comment on SoftBank’s estimate, according to another person familiar with the matter.
“We are convinced that the above speculation about the valuation downgrade is clearly incorrect. Valuation is the result of business performance. According to our latest audited results, we clocked Rs 7 cr maiden adj EBITDA earnings in the June quarter, showing a 41% gross profit margin and a 45% increase in gross booking value per hotel per month over last fiscal year,” a spokesperson said. van Oyo said in a statement.
“These are dramatically improved results and the strong performance trajectory is expected to continue. So there is no rational basis for a write-down.”
Bloomberg News first reported the valuation cut, noting that it had previously slashed the Indian startup’s valuation to $3.4 billion.
The revelation comes at a time when Oyo is still months away from an IPO. The Indian startup filed its IPO application with the local market regulator earlier this week. The startup originally planned to raise up to $1.16 billion in the IPO at a valuation of $12 billion.