Oyo may list in 2-3 years, look at $18bn valuation: Report

Gurugram-based budget hospitality chain Oyo Hotels & Homes is gearing to take the public route within the next two-three years, The Mint reported.

The report, citing multiple sources aware of the matter, said the company might possibly look at a valuation of $18 billion if and when it takes the listing route.

The valuation sought by the company will also likely make it the second-most valued company after Paytm, the report said, adding that Oyo is likely to go for a US listing as it is unlikely to meet the criteria of profits to list on the Indian bourses.

E-mail queries sent to Oyo seeking more information on the development did not elicit a response at the time of publishing this report.

Earlier this week, media reports had said that founder and chief executive Ritesh Agarwal was in the midst of buying back shares worth $1.5 billion (Rs 10,298 crore at current exchange rate) from early investors Sequoia Capital and Lightspeed Venture Partners.

The deal will raise his shareholding to around 30% from 10%. Along with the stakes of the management and employees, the holding will increase to 33%.

Agarwal owns 9.43% while Sequoia and Lightspeed own 10.24% and 13.4% respectively, according to private market data and research platform paper.vc. 

In another move, SoftBank is reportedly buying out stakes from Oyo’s minority investors. Sequoia, Lightspeed and Greenoaks are likely to see a partial exit as a result of this exercise.

Oyo has restricted the shareholding limit of SoftBank, its largest investor, to 49.99% in a possible bid to retain control.

While Oyo is on track to raise another $1.5 billion, according to online media publication Entrack, The Economic Times reported that Oyo is restructuring its business into three units — India, international, and technology and brand licensing. 

Oravel Stays Pvt. Ltd will run the technology and brand while Oravel Stays Singapore Pte. Ltd will operate the global business. According to the new structure, all shareholders of Oravel Stays Pvt. Ltd will get equal shares in the India business unit. Oravel Stays Pvt. Ltd will hold a stake in the Singapore entity.

Oyo has been on an aggressive global expansion drive. Most recently, it entered Vietnam as it continues to strengthen its presence in Southeast Asia. Oyo said it has started with over 90 franchised hotels in six cities, including Hanoi and Ho Chi Minh, and it plans to expand its footprint to 10 cities in Vietnam by the end of 2020.

The company claims to be operating in more than 800 cities in 80 countries, including the US, China, Europe, the UK, India, Malaysia, Indonesia, the Philippines, Japan and several cities in West Asia.