India: Indian hospitality chain OYO is reportedly in discussions with Malaysian sovereign wealth fund Khazanah Nasional Berhad ahead of a potential pre-IPO $400 million funding round, according to people familiar with the matter.
Sources told Inc42 that the company is seeking to achieve a valuation of around $6 billion through the investment. Discussions are believed to be at a preliminary stage and investment management firm Avendus Capital is said to be advising on the transaction.
In October, it was revealed that OYO was attempting to raise $250 million from investors, with a substantial portion of the funding being directed to settling the company’s $660 million term loan B and eliminating its debt ahead of a planned initial public offering [IPO]. Reports also emerged that OYO was in talks with private equity firm Apollo Global Management to refinance the aforementioned $660 million loan, which currently has a deadline in 2026, ahead of the planned IPO.
Previously valued at a high of approximately $10 billion, OYO had supposedly targeted a date around the Indian festival of Diwali [12 November] last year to close its IPO but it did not materialise.
Softbank-backed OYO first filed to go public via an IPO in 2021 but its prospective listing has been delayed multiple times due to volatile market conditions, including in January last year when the national Indian capital markets regulator, the Securities and Exchange Board of India [Sebi], asked OYO’s parent company to refile its draft IPO papers with certain updates. It has also suffered from plunging valuations for technology firms that also wanted to go public since the Covid-19 pandemic.
The company confidentially submitted a “pre-filing” document to resume its IPO in March last year.
OYO’s most recent notable funding came from global tech corporation Microsoft, which invested $5 million in the hospitality chain at a $9 billion valuation in 2021.
Some of OYO’s key investors include the likes of Lightspeed, Softbank and Peak XV [formerly Sequoia India].
