Oyo delays IPO for third time due to SoftBank's opposition

Oyo Hotels has postponed its planned IPO, originally set for October, citing opposition from SoftBank and uncertain market conditions.

This marks the third delay since 2021.

SoftBank, which holds a significant stake in Oyo, has advised delaying the IPO until the company’s earnings improve.

Oyo may now target a listing in March 2026, aiming for a valuation over US$7 billion.

Founder Ritesh Agarwal has been pushing for a timely IPO to meet repayment conditions on a US$2.2 billion loan he secured in 2019.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Oyo’s profitability pivot reflects broader shift in startup investing

Oyo’s journey showcases the dramatic changes in startup valuation models over the past five years.

The company reached a peak valuation of $10 billion in 2019 despite reporting escalating net losses that grew from $52 million in FY18 to $335 million in FY19, highlighting how growth was prioritized over profitability during that era.

Only in 2024 did Oyo report its first annual net profit, coming after years of restructuring that included laying off 20% of its 12,000 employees in India by the end of 2019 and exiting 200 of 600 cities in its home market.

SoftBank’s internal valuation markdown of Oyo to $2.7 billion in 2022 (down from $10 billion) reflects a broader market correction that has hit growth companies particularly hard as investors increasingly demand clear paths to profitability.

The current IPO delay indicates how dramatically investor expectations have shifted. What was once celebrated as ambitious expansion is now scrutinized for sustainable unit economics and consistent profitability.

2️⃣ Complex founder financing creates unusual governance challenges

The $2.2 billion loan that Ritesh Agarwal secured in 2019 to increase his ownership stake above 30% has created a unique corporate governance situation with significant implications.

This financing arrangement, personally guaranteed by SoftBank founder Masayoshi Son, has created a situation where the IPO timeline is now being influenced by loan repayment schedules rather than optimal market timing or business readiness.