Japan’s SoftBank has cut the valuation of OYO Hotels by more than 20% as the start-up preprares for an initial public offering (IPO) early next year.
According to Bloomberg report, the Japanese investor, the largest shareholder in the hotel booking company, reduced its estimated value for Oyo to $2.7 billion in the June quarter from an earlier $3.4 billion after benchmarking it against peers with similar operations.
OYO’s valuation had reached $10 billion in a 2019 funding round.
Oyo has filed a fresh round of financial documents with Securities and Exchange Board of india (Sebi) as it plans for a stock market debut after cost cuts and recovery in travel helped it reduce losses.
Oyo aims to tap the market at a valuation of about $5 billion next year as soon as the Sebi approves its public debut.
On speculations that it is targeting an early 2023 IPO at a $5-billion valuation, OYO said, “We have not decided the exact timing for the IPO and the IPO valuation is also highly speculative.”
The company stated in its initial filing in September of last year that it intended to raise $1 billion through the sale of both new and existing investor shares totaling 84.3 billion rupees.
Oyo stated that it was confident that its valuation shouldn't have been reduced given its improving business performance but added that the timing of an IPO hadn't been determined.
“We are confident that the above speculations about valuation markdown is patently incorrect. Valuation is an outcome of business performance," the startup said in a statement. “We have not decided the exact timing for the IPO and the IPO valuation is also highly speculative.