OYO gears up for IPO: Five-Bank pitch to SoftBank scheduled in London, say sources

Travel-tech company OYO is gearing up for a pivotal investor engagement with SoftBank, its largest shareholder, with a stake of more than 40%, as the company explores its long-anticipated public listing. Sources familiar with the matter confirmed to CNBC-TV18 that OYO has roped in a consortium of five investment banks to present IPO plans to SoftBank executives in London this June.

Among the banking partners are global heavyweights Citi, Goldman Sachs, and Jefferies, joined by Indian firms ICICI Securities and Axis Capital. The upcoming discussions are expected to shape the trajectory and timeline of OYO’s IPO push.

The development was first reported by PTI.

SoftBank, which has backed OYO through multiple funding rounds, is looking to assess market positioning, projected valuation benchmarks, and investor demand ahead of a potential listing, sources added. The high-level meeting will be held at SoftBank’s Grosvenor Street office in London, with managing partner Sumer Juneja set to attend. OYO’s founder and Group CEO Ritesh Agarwal, along with senior members of his leadership team, will also be present.

Insiders say that SoftBank’s stance will be instrumental in shaping the IPO timeline. “SoftBank continues to back its portfolio companies like OYO that have demonstrated strong operational recovery. A primary issue would allow OYO to retire part of its debt, immediately boosting EPS,” one person aware of the discussions told CNBC-TV18.

It’s important to note that the Softbank-backed startup refiled DRHP for IPO via confidential route in April 2023 to raise up to $400-600 million from public markets. OYO — once valued around $10 billion had filed to raise ₹8,430 crore ($1 billion) in its original effort to go public in 2021. The launching of the IPO was delayed due to the then volatile market conditions. Oyo's $10 billion valuation was last seen in 2019, shortly after founder Ritesh Agarwal led a buyback. The company's valuation has since fallen significantly to around $2.5 billion.

Sources added that the company is now considering a potential valuation in the $6–7 billion range. The travel-tech platform is considering a 10% equity dilution via a blend of new share issuance and secondary share sales. Sources added that OYO, now operating in the black and generating surplus cash, is keen to keep dilution minimal while unlocking value through the public route.

It was earlier reported that OYO could file its draft red herring prospectus (DRHP) between August and September this year. OYO is weighing whether to proceed with FY25 numbers or wait for a stronger showing in the first half of FY26 to anchor the offering, sources confirmed.

In a leadership meet on March 5, Agarwal projected that the firm could hit a PAT of ₹1,100 crore in FY25-26, CNBC-TV18 had learnt. He also outlined an expected EBITDA of ₹2,000 crore for the same period, powered by top-line expansion and gains from the Motel 6 acquisition.

Motel 6, now part of OYO’s portfolio after a $525 million all-cash acquisition of G6 Hospitality from Blackstone, is expected to contribute over ₹630 crore to the company’s EBITDA in its first full year of integration.

The company's financial turnaround appears to be gaining momentum. OYO reported a PAT of ₹166 crore for Q3 FY25, a six-fold jump from ₹25 crore in the year-ago quarter. Quarterly revenue touched ₹1,695 crore, up 31% year-on-year. EBITDA for the period reached ₹249 crore, with a Gross Booking Value of ₹3,341 crore—up 33% over the prior year.

For the first nine months of FY25, OYO posted a cumulative profit of ₹457 crore, reversing a ₹111 crore loss in the same period last fiscal. The company attributes the surge to growth in India and the US, alongside contributions from Southeast Asia and the Middle East.

Credit ratings agency Moody’s recently upgraded OYO’s rating from B3 to B2 with a stable outlook, citing expectations that the company will clock EBITDA of $200 million in FY25-26. With strategic realignments, operational efficiencies, and a renewed investor push, OYO seems to be charting a clear path toward the public markets—this time, with firmer footing.

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