Why is OYO so desperate for an IPO? The story of a financial house of cards

So OYO is trying to go public.. yet again! This time at a "grounded" valuation of $6-7B.

If you remember, just a month ago, there was news that Softbank had said 'No' to OYO's IPO plans. The investor said that the company "needs to improve its earnings" before making that bid. The news stated that this meant the end of the road for OYO's third IPO shot, and that the company will now be looking for an IPO sometime next year instead (in what would be its fourth attempt to go public).

But now, here we are again. OYO's trying to rush its way to an IPO slated for Q1 of 2026. Why? Why such a haste in wanting to go public? Why so many attempts to IPO? Why so many shifts in self-assessed valuations in all those attempts? OYO's self marking of its valuation has gone from:

$12B in 2021 (1st IPO attempt, 1st bid)

To $9B in 2022 (1st attempt, valuation revised)

To $6B in 2023 (2nd attempt, withdrawn due to "material changes")

To $2.4B in 2024 (private round by family offices, lifeboat for OYO)

To $7B in 2025 (3rd attempt, Softbank said 'No', but the company back at it)

What kind of a shit show is this?

Game over? Apparently not. Brace for the fourth attempt!

People who've been following my writings know why OYO is hell bent on throwing this bucket of muck on retail investors. But I'm not John Travolta, so many might still not be aware.

The real reason why OYO is desperate to go public is that in 2019, Agarwal personally bought back ~ $1.5B worth of OYO shares from early investors (like Sequoia, Lightspeed) through a Cayman Islands entity called RA Hospitality Holdings. That debt ($1.2B of which was financed via debt from Japanese & other banks) was reportedly guaranteed by SoftBank, which was already a major investor in OYO.

Solely because of that transaction, OYO's valuation had reached $9.6B.

While the idea was to build the ponzi by share buyback, and then pour that ponzi on retail investors in 2021 at an even more inflated valuation (hence the 1st IPO attempt at $12B), it obviously didn't work out.

BluSmart, OYO, and a web of financial engineering.

But the problem is that now it's time for Agarwal to pay that debt back. If he doesn't, as the guarantor, Softbank will have to pay for it on his behalf, which will essentially mean Softbank taking over his pledged shares, and him getting forced out of the company.

So if the IPO doesn't happen, Agarwal will default on his debt, and he'll be out. No doubts about that.

Now while that's Agarwal's problem, there's another problem which is specific to OYO. And that's the Term Loan it took to buy Motel6, etc. It was a $660M loan, of which $465M is still unpaid.

ONLY THE INTEREST, of the above loan is over ₹525 Cr/yr. While the company showed an unaudited (and definitely "engineered") PAT of ₹623 Cr in FY25, is it possible that OYO can pay that debt back, just basis its cash accruals? Forget about the principle, but even the interest?

NO. Without the IPO, it'll be IMPOSSIBLE.

This is the real reason why the OYO wants an IPO, come hell or high water. It's a dumpster truck on steroids. Average Aakash beware.

Now a good question is this: If OYO has to IPO, what would be its fair valuation so the Average Aakash isn't squeezed. That's a very important question, something that has a simple answer: About $2.5-3.5 Billion.

How did I arrive at that number? I'll write about it, but sometime later.

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