Oyo considers reducing IPO size by nearly 50% amid market turmoil: report

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Oyo considers reducing IPO size by nearly 50% amid market turmoil: report

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Oyo, the high-profile affordable housing startup that applied for an initial public offering last year, is considering cutting its fundraising goal in half or even suspending its debut, according to people. who are familiar with the matter.

Faced with headwinds including crashing stock markets, Oyo Oravel operator Stays Ltd. could trim its Indian IPO from the nearly $ 1 billion initially sought to halve it, people said, declining to be identified to discuss. internal matters. It is also considering halving its projected valuation from the $ 12 billion originally planned, they said. Oyo may even decide to suspend its IPO plans, people said.

The resolutions underscore investors’ reluctance to buy IPOs during a period of extraordinary market turmoil. The Airbnb Inc.-backed startup had already considered lowering its target valuation to $ 9 billion earlier this year after Paytm’s disastrous debut, but that was before the conflict in Ukraine and inflationary concerns sparked a global technology selloff.

Oyo, backed by investors including SoftBank Group Corp and Sequoia, filed a preliminary application in September aiming for an IPO in early 2022. Almost six months later, the initial documents, known as the draft red herring prospectus. , have yet to get the green light from Indian stock market regulator.

Read more: IPO Mania gains control of reality in India after a series of flops

None of the deliberations surrounding Oyo’s IPO went far enough to lead to formal discussions or board-level approval, people said. Oyo representatives did not immediately respond to a request for comment.

Oyo’s hesitation is emblematic of a cooling in the unicorn minting technology industry in India, where nearly 50 startups secured venture funding with valuations of $ 1 billion or more in 2021 alone. signs of slower fundraising and falling valuations as investors have second thoughts.

The most palpable slowdown was in the IPO arena, after the crash in stock prices dampened investor enthusiasm.

SoftBank, Oyo’s largest lender and one of the most prolific dealmakers in Indian startups, is now taking a more cautious approach with its investments there. The Japanese firm, which has been bullish throughout the past year, withheld funding for at least two startups after distributing term sheets, or agreements that spell out the terms and conditions of an investment, according to a person familiar with the investment. question.

The two startups operated in the e-commerce and software-as-a-service segment, where valuations have dropped dramatically.

If Oyo decides to drastically change its IPO terms, it will have to file a new DRHP, one of the people said.

Many other startups that have received approval for their IPOs have chosen not to proceed. Delhivery Ltd.’s nearly $ 1 billion IPO did not move forward, and neither did API Holdings, which runs the online pharmacy Pharmeasy. Delhi very and API received regulatory approval in January and February respectively.

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