Oyo Rooms Planning IPO At Valuation Of $18 Billion; Restricts Softbank From Owning More Than 49.9% Stake

Oyo Rooms is planning an IPO
Oyo Rooms is planning an IPO

The hotel chain and startup OYO, is widespread over the news, for it is looking to expand now more than ever. Sometime back we’d informed you of how OYO was among the top hotel chains at affordable rates in China.

It has come to our notice that OYO is on plans to segregate its business to three distinct verticals in India: international, technology and brand licensing, in order to simplify its business model. Not just this, its founder Ritesh Agarwal is in talks of buying the shares of his own company from a few early-stage investors.

Oyo is planning vigorously to go global and hence is taking various steps to achieve so. It is preparing for an initial share sale in the next two-three years.

OYO to Segregate its Business into 3 Models

In order to simplify its business model and efficiently work on each sector, OYO has decided to segregate its main hotel business into three sections: international, technology and brand licensing. It is currently being seen as a medium for the company to have clearer goals and objectives and corresponding specific job roles and regulations.

This in turn shall improve the company’s stance and give it a stronger competitive edge. The main point would be that it will get the profit of maintaining its own unique and specific requirements, risks and investor profile; rather than following the international hotel’s growth path. 

It has been growing since Aditya Ghosh,  the former Indigo president has been appointed as the CEO.

OYO Founder to Buy Shares in his Own Company

The  26-year-old OYO founder, Ritesh Agarwal is looking forward to buying back stakes a few early-stage investors. He apparently holds about 10% shares currently in the company. If he manages to score another 5-10%, he’ll own a 20% stake in his own company.

Ritesh is one of the few founders in India who owns a double-digit stake in the company he founded. It is being anticipated that the amount required to buy additional stakes will come out to be $2 billion. The same happened 2 years ago when the co-founder of Ola Bhavish Aggarwal behaved in a similar manner.

If Ritesh is successful in his yield, he will be the 2nd largest stakeholder in the company after SoftBank Vision Fund. Besides, the latter cannot increase its stakes in OYO without the consent of Sequoia Capital, Greenoaks Capital, LightSpeed Ventures, and Ritesh Agarwal.

OYO to Climb Upto $18 billion Valuation Soon

OYO is preparing for an initial share sale in the next two-three years. By that time, the share could value up to $18 billion, making it the country’s 2nd most valuable startup after Paytm. Last year OYO raised $800 million in its latest round of funding from SoftBank’s Vision Fund, along with its other investors. At that time, the company was valued at nearly $5 billion, six times its 2017 valuation.

With every new market that Oyo enters, it will add $2-3 billion to its valuation. If executed well, Oyo can be as highly valued as Uber in the long run. The company has begun taking steps towards the IPO. 

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