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Oyo has US$1b to fund operations until IPO, CEO tells employees

Oyo has US$1b to fund operations until IPO, CEO tells employees

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2 -min read
Listen to this article

[BANGALORE] Ritesh Agarwal, founder and chief executive officer of Oyo Hotels, told employees the Indian startup is making progress in recovering from the coronavirus fallout and has about US$1 billion to fund operations until an initial public offering (IPO).

The 27-year-old entrepreneur made the comments in a fireside chat with Oyo board member Troy Alstead, after the once high-flying company endured months of layoffs and losses as Covid-19 hammered its business. Oyo is one of the largest startups in the portfolio of SoftBank Group, reaching a valuation of US$10 billion before the downturn.

Mr Agarwal said the company's focus is on getting revenue per available room to 60 per cent to 80 per cent of pre-pandemic levels across all markets. India, China, Japan and South-east Asia are making progress in reaching that range, he added.

"We are still not at the best place, a lot more work to be done," Mr Agarwal said, according to a transcript of the discussion seen by Bloomberg News. "We continue to hold close to a billion dollars of cash, including all our group companies."

Mr Alstead, the former chief operating officer of Starbucks, is an independent director. Board members also include Gerry Lopez and Munish Varma of SoftBank.

Oyo's breakneck expansion, encouraged and financed by SoftBank founder Masayoshi Son, led to operational missteps and soured partnerships. The company ended up laying off or furloughing thousands of employees, cutting its overall headcount by two-thirds to about 10,000.

Mr Agarwal told employees he has not felt any pressure from outside shareholders as he has cut back during the pandemic. Investors have "very strong" representation on the board and directors give input on the business, he said.

The young founder, who in a highly unusual move borrowed US$2 billion to buy shares in his own company, hinted he wants to get the business in shape for a public offering.

"Our management's focus is to make sure that we have a well designed, IPO-ready company, available for our shareholders and board members to make the right decision," he said.

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