The early investors in the hospitality startup OYO, notably Lightspeed Venture Partners, have started talks to offload some of their stakes. This move values the company at around USD 3.9 billion, which is a 60% premium on the INR 1,457 crore funding round from August 2024 but doesn’t reach heights of its USD 9 billion valuation back in 2021. This comes at a time when OYO is pushing hard on expanding globally and consolidating its market position.
Partial Stake Sales and Returns
Peak XV Partners and Lightspeed Venture Partners have begun liquidating their OYO holdings. Peak XV was able to sell the remaining 3% stake and bags for between USD 80 and USD 90 million during the recent event. This is in addition to the more than USD 1.4 billion that Peak XV and Lightspeed Venture Partners received in 2019 when they sold a sizable portion of their stock to Ritesh Agarwal, the creator of OYO. Both investors still own some shares in OYO despite these sales. According to the company’s spokesperson, both Lightspeed and Peak XV are still pretty bullish about OYO’s future, especially with the acquisition of G6 Hospitality in the US and the company’s financial uptick.
Strong Financial Performance
In a big milestone, OYO posted its first profit in FY24 with a post-tax profit of INR 229 crore. The good times rolled into Q1 FY25 with another profit of INR 132 crore. This turnaround has been fueled by strategic forays into markets like the US, India, and Southeast Asia, with the company pulling in revenue from operations at INR 5,388.7 crore in FY24.
The acquisition of G6 Hospitality, which includes the Motel 6 and Studio 6 brands, for USD 525 million, was a game-changer. OYO is betting this move will push its EBITDA over INR 2,000 crore by FY26, with Motel 6 expected to chip in INR 630 crore annually. This not only broadens OYO’s footprint in North America but also brings in assets that match its growth strategy.
Fundraising and Stake Sales
With participation from well-known firms like InCred Wealth and the family offices behind Mankind Pharma, OYO was able to raise INR 1,457 crore in its Series G round back in August 2024. Ritesh Agarwal himself contributed further funds, intending to contribute an additional INR 550 crore. Celebrities like Gauri Khan, Madhuri Dixit, and Amrita Rao have all embraced OYO, demonstrating how popular it has become beyond simply the elite.
A few family offices were assisted by Nuvama Wealth in purchasing shares valued at INR 100 crore, which was equivalent to USD 4.6 billion. Despite this greater figure, investors such as Lightspeed are balancing liquidity with confidence in OYO’s future by cashing out a little while maintaining some stake.
IPO Prospects
OYO had planned to go public, but to concentrate on private fundraising, the company withdrew its draft red herring prospectus. It is believed that Oyo may reapply soon, this time looking for an IPO of between INR 3,450 – 5,200 crore, which is less than the INR 10,300 crore they first targeted. This demonstrates a pragmatic response to market circumstances, emphasizing stability and expansion over merely raising capital.
The OYO IPO could be a turning point for OYO, proving its worth to public investors and offering liquidity to its backers. Analysts are optimistic, given OYO’s recent profitability and strategic expansions.
Conclusion
The partial sale of stakes by Lightspeed Venture Partners and Peak XV tells a story of changing dynamics at OYO as it eyes a public listing. These moves are not just about cashing out but also about maintaining belief in OYO’s trajectory, supported by strong financials, smart acquisitions, and a global push. With a commitment to sustainable profits and innovative strategies, OYO seems well set to navigate the ever-changing hospitality landscape.