Oyo Delays IPO Due to SoftBank's Concerns Over Market Volatility and Financial Performance
SoftBank's opposition hinders Oyo's third attempted Initial Public Offering (IPO), according to a recent report.
Budget hotel aggregator Oyo has held off on its third attempt to go public, citing market uncertainty and advice from its largest investor, SoftBank [1]. According to reports, SoftBank has urged the company to hold off on an IPO until its financial performance demonstrates stronger improvement.
This decision marks Oyo's third postponed IPO since 2021, as the current market environment has been deemed unfriendly. Investor sentiment has weakened partially due to global instability and reduced risk appetite linked to US President Donald Trump’s tariff policies [1].
SoftBank's Vision Fund is Oyo's largest shareholder, with a stake that surpasses that of founder Ritesh Agarwal, who owns over 30% of the company. Agarwal had initially pushed for a quick IPO to fulfill conditions related to a restructured $2.2 billion loan he secured in 2019 for raising his stake in the company [1].
The loan, personally guaranteed by SoftBank founder Masayoshi Son, had a payment deadline for the first installment in December. Lenders indicated they might extend the repayment timeline if Oyo goes public this year [1]. However, SoftBank may help Agarwal secure an extension on the loan in exchange for delaying the IPO [1].
Oyo's financial performance has shown noticeable improvement in FY25, with Q3 FY25 net profit increasing six-fold to ₹166 crore compared to the previous year, and a 31% YoY revenue growth to ₹1,636 crore [2][4]. The company's US operations now account for 24% of total revenue, following its $144.4 million acquisition of G6 Hospitality [4][5]. This acquisition added 1,500 franchised hotels and boosted corporate client additions by approximately 50 monthly since January 2025 [4][5]. OYO projects FY25 operating income to surpass ₹6,700 crore, reflecting a recovery from pandemic lows [5].
The company’s future plans include:- Delaying the IPO to March 2026, aiming for a $7 billion valuation [3].- Negotiating loan restructuring for Agarwal’s $2.2 billion debt [3].- Expanding in India and the US, including a 22% increase in Indian hotel count (FY25 vs. FY24) and leveraging G6’s Motel 6/Studio 6 brands to target corporate clients in key US states [4][5].
The revised strategy focuses on strengthening profitability metrics to attract public investors while navigating volatile market conditions that have recently led peers like Ather Energy to cut IPO valuations [3][5].
(Sources: [1] Bloomberg, [2] FE Business, [3] Reuters, [4] Economic Times, [5] VCCircle)
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- SoftBank's concerns over market volatility and financial performance have led Oyo, a budget hotel aggregator, to delay its third intended Initial Public Offering (IPO).
- The decision to postpone the IPO was influenced by the current market environment, which has proved unfriendly due to weakened investor sentiment and reduced risk appetite.
- The Vision Fund of SoftBank, Oyo's largest shareholder, has urged the company to hold off on an IPO until its financial performance shows stronger improvement.
- Oyo's founder, Ritesh Agarwal, had initially pushed for a quick IPO to fulfill conditions related to a restructured $2.2 billion loan secured in 2019, but SoftBank may help Agarwal secure an extension on the loan in exchange for delaying the IPO.
- Despite the delayed IPO, Oyo's financial performance has shown significant improvement in FY25, with a six-fold increase in Q3 FY25 net profit and a 31% Year-over-Year (YoY) revenue growth.
- As part of its revised strategy, Oyo plans to delay the IPO until March 2026, aiming for a $7 billion valuation, and expand in India and the US while focusing on strengthening profitability metrics to attract public investors.
- The recent volatility in the market has led peers like Ather Energy to cut IPO valuations, and Oyo aims to navigate these conditions while negotiating loan restructuring for Agarwal’s $2.2 billion debt.
