Oyo to delay IPO plans

The Indian hotel proptech is pushing back plans for a public launch due to volatile market conditions. Oyo had previously fired thousands of employees at the start of the Covid-19 pandemic.

Why should we care?
Oyo had previously hoped to raise $1.1B through an IPO, but it now eyes 2023 as the earliest opportunity for a public entrance. The geopolitical reasons for the delay are clear: economic uncertainty caused by Russia’s invasion of Ukraine, an ongoing pandemic, and a tanking stock market. But India’s unique history of (fin)tech IPOs—namely Paytm, which has seen its stock price plummet by 72% since its launch—offers a clear warning to Oyo. Timing is one concern, as is a company’s business model. Oyo previously partnered with existing small hotels, standardized their fittings, branded them under the Oyo name, and guaranteed minimum revenue streams for its partners. It’s now switched to an “asset-light” model and ditched the guarantees. To make an eventual IPO less of a gamble, then, Oyo has passed the risk of signing up for Oyo away from the investor and onto the hotel partner. This may work in the short term from a stock-market perspective, and fewer guarantees may make for more thoughtful growth, but, if other proptechs follow in Oyo’s footsteps, then we may see higher barriers to entry for B2B proptech clients, with those clients getting the short end of the stick during economic downturns.