Oyo files backed by SoftBank for $ 1.16 billion IPO – TechCrunch

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Oyo is ready to explore the public markets. The eight-year-old Indian budget hotel giant has filed the documents with the local market regulator for an initial public offering, in which it seeks to raise around $ 1.16 billion.

The company is looking to issue new shares worth $ 940 million (primary) and offer to sell approximately $ 190 million of existing shares (secondary). The rest is set aside to be raised in pre-IPO funding.

While the company – which counts SoftBank, Airbnb, Lightspeed Venture Partners, Sequoia Capital India, and Microsoft among its investors – hasn’t provided a ton of details on what it’s looking for retail investors, here’s what we do know: As As we reported earlier this week, Oyo is seeking a valuation of over $ 12 billion in the IPO. And the young founder of the startup, Ritesh Agarwal, does not plan to sell his shares as part of the public offer.

Today’s filing marks a major turnaround for Oyo, which has seen over-ambitious growth in international markets in recent years, but corrected the course by curbing some of those efforts.

Much like all other hospitality and travel companies, Oyo has also been severely disrupted by the pandemic. At one point, the startup reported that its business had declined by as much as 60%, with several countries imposing lockdowns as they rushed to contain the spread of the virus.

But it has shown signs of a rapid recovery in recent weeks as some of its key markets have opened up in recent quarters. The startup said in today’s filing that four markets – India, Indonesia, Malaysia and Europe – account for around 90% of its overall revenue.

Oyo’s story begins with Agarwal, who left his rural town in search of a better education in Rajasthan. He often visited his friends in Delhi and stayed at their homes or rented cheap hotels. It was then that Agarwal, then in his late teens and recently out of college, spotted a budget hotel that was struggling to fill its rooms every night.

Agarwal then, he said in previous conversations, convinced the hotelier to negotiate a deal allowing him to renovate the hotel and began marketing it to businesses in exchange for reduced future commissions.

This deal immediately proved to be a success, which then prompted Agarwal to explore expanding its offering – now using technology – to focus on neglected segments of the market.

This was the start of Oyo, which immediately became successful and quickly caught the attention of a foundation run exchange of PayPal co-founder Peter Thiel.

Oyo first assumed the position of market leader and then began to expand, starting with Southeast Asia, Europe, China and the United States, to name a few. -a. His aggressive expansion bet had a mixed success rate. It’s doing well in Europe and Southeast Asia, but making inroads in China and North America has proven to be more difficult than the startup had likely assumed.

At the height of this expansion, Agarwal, 27, invested $ 700 million in the startup. That year, he announced that he planned to spend $ 2 billion through an entity called RA Hospitality Holdings to increase his stake in Oyo to 30%, from 10% before the $ 700 million investment. of dollars.

Catherine Shu contributed to this story.


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