Introduction

India’s hospitality unicorn OYO, led by founder Ritesh Agarwal, has been a focal point of investor interest and market speculation for years. After multiple attempts at going public, OYO’s IPO dreams have once again hit a pause—this time not because of regulatory hurdles or market conditions, but due to internal disagreement with its largest backer, SoftBank.

SoftBank Pulls the Brakes

According to recent media reports, SoftBank, which holds a 40% stake in OYO, has asked the company to defer its proposed IPO until its financial performance stabilizes. The Japanese conglomerate is reportedly concerned about OYO’s current earnings profile and believes a stronger financial showing will lead to better valuation and investor sentiment.

This is a significant development given SoftBank’s influential position in OYO’s boardroom. Founder Ritesh Agarwal owns around 30%, making this a classic case of diverging interests between a founder eager to go public and a key investor seeking financial prudence.

The IPO Timeline: A History of Delays

OYO initially planned to go public in 2021 with a targeted valuation of $12 billion. However, the IPO was shelved due to the pandemic-induced market uncertainty. The company made another attempt in March 2023 by filing confidential papers with SEBI, but the listing was again delayed in May 2023.

In March 2024, OYO revived its IPO ambitions amidst pressure to meet upcoming debt obligations. However, the current standoff with SoftBank has cast doubt on whether an IPO will materialize this year.

Debt Overhang and Strategic Stakes

The pressure to list is not only strategic—it’s financial. Back in 2019, Ritesh Agarwal borrowed $2.2 billion from lenders including Mizuho Financial Group, backed by a personal guarantee from SoftBank’s Masayoshi Son. The purpose of the loan was to increase his stake in OYO and gain strategic control. That loan was later restructured in 2022, and repayment of the first tranche—amounting to $383 million—is due in December 2025.

According to Bloomberg, creditors have warned that if OYO fails to list by October 2025, Agarwal may be compelled to repay the amount much sooner. However, if the IPO goes through this year, the repayment deadline could be pushed to 2027. This creates a financial incentive for Agarwal to push for an IPO despite SoftBank’s resistance.

SoftBank’s Possible Middle Path

SoftBank’s opposition doesn’t appear to be absolute. Reports suggest that it may be willing to support Agarwal in negotiating an extension of the loan in return for postponing the IPO. This could allow OYO more time to strengthen its earnings, restore investor confidence, and aim for a higher valuation in the future.

Strategic Implications

The delayed IPO has significant implications:

• For Agarwal: The delay means continued uncertainty on his loan obligations and limited flexibility in unlocking capital from OYO shares.

• For SoftBank: By postponing the IPO, SoftBank may preserve value and avoid a potentially discounted listing, especially if OYO’s financials are not yet strong.

• For Markets: Investors awaiting the OYO IPO as one of the key startup listings of FY25 may now have to reset their expectations.

Conclusion

OYO’s story is emblematic of the evolving dynamics between founders and their marquee investors in India’s startup ecosystem. While the ambition to list publicly remains intact, current financial realities and investor priorities have forced a recalibration. Whether the company goes public later this year—or waits to build a stronger earnings base—will likely depend on how these negotiations between Agarwal and SoftBank unfold.