OYO retreats from IPO plans for the second time
What's the story
Indian budget hotel chain, OYO, has withdrawn its initial public offering (IPO) application, from the Securities and Exchange Board of India (SEBI) for the second time.
The Gurugram-based start-up, once valued at $10 billion, canceled its IPO plans on May 17, according to a disclosure on SEBI's website.
This follows an initial filing with SEBI in 2021 and a refiling in 2023, neither of which were approved by the regulator.
Finance
Valuation and funding efforts under scrutiny
Earlier this month, TechCrunch reported that OYO was seeking a new round of funding at a valuation of $3 billion or less, which the company denied.
However, recent sources reveal that the start-up is now attempting to raise funds at an even lower valuation range of $2-2.3 billion.
Despite these challenges, OYO has managed to raise over $3 billion in equity and debt so far, with backing from major investors like SoftBank, Peak XV, Lightspeed, Airbnb, and Microsoft.
Criticism
OYO's business practices and cost-cutting measures
Once celebrated as a game-changer in the budget hotel category, OYO has recently faced criticism for its business practices.
The company's readiness for public scrutiny has been questioned following the rejection of its IPO applications by SEBI.
In 2020, as part of cost-cutting measures, OYO laid off thousands of employees.
These actions have cast a shadow over the start-up's reputation and future prospects in the industry.