Prospective investors in the SoftBank-backed parent of OYO have indicated a pre-money value of about 250 billion rupees, against the 400 billion rupees the company has sought, according to people familiar with the matter.
Another late-stage private company is finding that public investors want a lower price than it does.
Investors considering Oravel's planned initial public offering in India have indicated interest at a valuation of about 250 billion rupees, or $2.6 billion, before new money, people familiar with the matter told Bloomberg News. The company has been seeking about 400 billion rupees.
The gap is about 37.5%. Oravel, the parent of OYO and a company backed by SoftBank Group, has not set a price range for the offering, and the discussions are part of early price discovery before a launch. A listing could come as soon as November.
In June, Oravel filed updated papers to raise up to 66.5 billion rupees, or about $703 million, entirely through new shares. The company, now operating under the PRISM brand, plans to cut the fresh issue to as much as 33.5 billion rupees, the Press Trust of India reported on Oct. 20, citing sources.
A familiar repricing
The pattern is becoming familiar in private markets. Companies that raised money at high valuations in private rounds are testing those prices against public investors, who have the option of buying listed companies at current market multiples. When the two disagree, the company must either accept a lower price, delay the listing, or shrink the offering.
For venture and growth investors, an IPO price well below a private mark is one of the most direct signals of where valuations really stand. The final price will matter for how SoftBank and other backers value their stakes, though none has said how it will treat the holding.
Choices for the company
Oravel can accept investors' terms, push for a price closer to its ask, or wait. Each has costs. Accepting a lower price crystallizes a lower valuation. Holding out risks a weak debut or a delay that leaves the company without new capital it planned to use.
What to watch
A price band and launch date, any change in the size of the offering, and the first-day trading performance if the listing proceeds.