SoftBank, the largest backer of Oyo, has cut the Indian hotel chain startup’s valuation to $2.7 billion despite its claims of improved finances in recent months, a person familiar with the matter said.
The Japanese conglomerate, which had slashed its internal valuation of Oyo to $3.4 billion earlier, further slashed the valuation of Oyo by more than 20%, the person said. An Oyo spokesperson said the markdown makes “no rational basis.”
Oyo — which also counts Sequoia India and Lightspeed Venture Partners India (both of which have taken significant exits from the startup), Airbnb and Microsoft, was valued at about $10 billion in a round in 2019.
SoftBank owns 45% of Oyo, according to the startup. It’s not rare for investors to markup or markdown the valuation of their portfolio startups. Since SoftBank is the largest investor of Oyo and owns nearly half of it, the Japanese firm’s estimation is a good signal of the startup’s health.
The startup held a board meeting earlier this month and did not share any updates on its valuation, nor acknowledged or commented on SoftBank’s estimation, according to another person familiar with the matter.
“We are confident that the above speculations about valuation markdown is patently incorrect. Valuation is an outcome of business performance. As per our latest audited results, we have clocked Rs 7 cr maiden adj EBITDA profit in the June quarter, at 41% gross profit margin and a 45% increase in gross booking value per hotel per month vs last financial year,” an Oyo spokesperson said in a statement.
“These are dramatically improved results and the strong performance trajectory is expected to continue. Hence, there is no rational basis for a markdown.” Bloomberg News first reported the valuation cut.
The revelation comes at a time when Oyo is months away from going public. The Indian startup earlier this week refiled its initial public offerings application to the local market regulator. The startup originally planned to raise up to $1.16 billion in the IPO at up to $12 billion valuation.
This is a developing story. More to follow…