Earthood Services Refiles IPO Papers with SEBI...
17 Jun, 2025
India’s hospitality unicorn Oyo has once again hit the pause button on its public debut. After plotting an October 2025 IPO, the budget-hotel powerhouse has pushed its third listing attempt into early 2026—thanks in large part to a reluctant nod from its biggest backer, SoftBank’s Vision Fund. This move speaks volumes about the shifting winds in India’s capital markets, where investors are demanding heftier profit proofs before opening their wallets.
There is a tug-of-war between Oyo and SoftBank, explore the market forces at play, and consider what this delay means for Ritesh Agarwal, his lenders, and the broader IPO landscape in India. Buckle up for a deep dive into a story that blends startup ambition, mega-fund influence, and a cautionary tale of growth versus profitability.
Background: Oyo’s rise and its IPO ambitions
Founded in 2012 by Ritesh Agarwal, Oyo Hotels & Homes (branded “OYO”) grew into one of India’s highest-valued startups, leasing and franchising budget rooms across 80 countries by 2020. Its meteoric expansion was fueled by heavy funding from SoftBank’s Vision Fund—now Oyo’s largest investor with roughly a 46.6% stake—alongside Agarwal’s own 33.2% holding.
Oyo first filed for a public listing in 2021, targeting a valuation of up to $12 billion, only to withdraw as pandemic-driven volatility erupted. A second confidential SEBI filing came in March 2023, but that too was shelved in May 2024 amid tepid markets and internal cash-burn concerns.
Third IPO delay: SoftBank pushes back
According to people familiar with the matter, SoftBank “does not favor” Oyo’s plan for an October 2025 IPO and has urged the startup to wait until earnings improve, Bloomberg News reported. As a result, Oyo now aims to list by March 2026 at a reduced valuation of $7 billion—down sharply from its earlier $12 billion target.
Oyo and SoftBank declined to comment when contacted by Reuters.
Market headwinds and peer postponements
India’s benchmark Nifty 50 index is up just 3% in 2025 but remains over 7% below its October 2024 peak, tempering IPO investor appetite. This caution has rippled across other big issuers:
Debt pressures on the founder
Oyo’s founder Ritesh Agarwal had pressed for a swift IPO to meet terms of a restructured $2.2 billion loan he took in 2019 to raise his stake—debt personally guaranteed by SoftBank’s Masayoshi Son. The first installment falls due December 2025, though lenders have signaled they may extend the timeline if Oyo lists this year.
SoftBank may agree to help secure that extension in exchange for delaying the IPO, Bloomberg reported, underscoring its leverage as Oyo’s biggest shareholder.
Why SoftBank is wary
SoftBank’s Vision Fund, which owns roughly 40% of Oyo, has grown increasingly focused on returns and sustainable profitability after earlier high-growth bets soured elsewhere in its portfolio. Pushing Oyo to build stronger earnings before going public aligns with SoftBank’s recent strategy of prioritizing operational health over rapid listings.
Broader IPO climate in India
Despite a record ₹1.4 lakh crore raised via 298 IPOs in 2024, primary markets have slowed in Q1 2025. Qualified institutional placements plunged nearly 75% quarter-on-quarter, and no FPOs launched in the first three months of 2025, per Prime Database.
An EY report shows India still captured 22% of global IPO activity in Q1 2025, raising $2.8 billion across 62 listings—but deal volume fell ~20% year-on-year, reflecting cautious sentiment. Obstacles such as a crowded IPO calendar and tariff-driven market jitters are further delaying deal flow.
Implications for Oyo and investors
Delaying the IPO allows Oyo time to bolster its financials—FY 2026 projections include ₹2,100 crore revenue and ₹1,100 crore PAT, per an ET report quoting Agarwal—but also prolongs reliance on private funding and SoftBank’s support.
For SoftBank, holding off could secure a stronger debut valuation and signal discipline to other portfolio companies. For public market investors, the wait-and-see approach underscores the premium now placed on profitability over growth-at-all-costs.
Looking ahead
With India’s IPO pipeline still robust—EY expects accelerated activity later in 2025 amid supportive policy and economic tailwinds—Oyo’s March 2026 target may yet prove opportune. However, rising interest rates, global uncertainties and execution risks remain. Watching Oyo’s upcoming earnings and its ability to meet debt covenants will be critical barometers for its eventual public debut.
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