Oyo Hotels & Homes, one of India’s leading hospitality startups, is expediting its Initial Public Offering (IPO) as a crucial debt repayment deadline looms for its founder, Ritesh Agarwal. The company is under pressure to finalize its listing before the end of the year, ensuring that Agarwal can meet the demands of its creditors, including Mizuho Financial Group Inc.
According to sources familiar with the situation, creditors have stipulated that Agarwal must repay $383 million from a multi-billion-dollar loan package if Oyo fails to go public by October. Lenders are closely monitoring Agarwal’s liquidity and are considering an extension of the repayment deadline to 2027 only if Oyo successfully completes its IPO this year.
The $2.2 billion loan, which Agarwal secured in 2019, was backed by SoftBank Group Corp. and its founder Masayoshi Son. The restructuring of this loan took place in 2022, but Agarwal has yet to repay the first tranche.
Oyo has been exploring a stock market debut for several years, but its plans were derailed by the Covid-19 pandemic, which significantly impacted its growth. Now, the company has resumed discussions with investment bankers for an IPO that could value the firm at up to $5 billion.
Key stakeholders in Oyo include:
SoftBank Group Corp., holding over 40% stake in the company
Ritesh Agarwal, with a personal stake exceeding 30%
Agarwal’s previous IPO attempts did not materialize, but this time, market conditions and investor sentiment might play a crucial role in determining the success of the listing.
Oyo’s family office, responding to inquiries about the IPO, emphasized that the listing decision would be based on the company’s strong financial performance. The firm reported a net profit for the fiscal year ending March 2024, and a strong outlook for the upcoming March 2025 results.
In an official statement, Oyo dismissed speculations about its financing arrangements, restructuring, and valuation as inaccurate rumors. The company also stated that the reported valuation is lower than some recent secondary market transactions.
SoftBank, Oyo’s largest shareholder, has denied Bloomberg’s report on the IPO, calling it inaccurate. Meanwhile, Mizuho Financial Group Inc., one of Oyo’s lenders, has not commented on the matter.
Oyo was founded in 2013 by Ritesh Agarwal, who dropped out of college to start the company. The startup initially gained immense support from SoftBank’s Masayoshi Son, who encouraged its rapid global expansion, particularly in Japan and the US. However, this aggressive expansion strategy led to significant financial losses and legal challenges.
The Covid-19 pandemic further disrupted Oyo’s operations, as travel restrictions and reduced demand for budget hotels led to a steep decline in revenue. Oyo’s struggles mirrored the broader venture capital funding boom in India, which saw startups prioritizing growth over profitability.
Despite its challenges, Oyo has shown signs of recovery in the post-pandemic era. The company reported a modest profit for the fiscal year ending March 2024, signaling a turnaround in business performance.
In late 2024, Agarwal injected ₹8.3 billion ($95 million) into Oyo through his Singapore-based investment firm. This capital infusion was aimed at stabilizing the company’s finances and strengthening its IPO prospects.
Conclusion: What Lies Ahead for Oyo?
Oyo’s IPO ambitions have resurfaced amid mounting financial obligations and lender scrutiny. The company’s ability to execute a successful public listing will be critical for Agarwal’s debt repayment plans and for maintaining investor confidence.
As Oyo navigates its final preparations for an IPO, the focus will be on its financial performance, valuation, and market conditions. If successful, the listing could mark a significant milestone in the company’s journey, allowing it to rebuild and expand its global presence.