OYO Bags $806.75 Mn Series F Funding From SoftBank, RA Holdings

Gurugram-based hospitality unicorn OYO has raised $806.75 Mn funding from existing investors SoftBank and founder Ritesh Agarwal owned RA Hospitality Holdings. The investment is the first tranche of $1.5 Bn Series F round, which was announced in October 2019.

According to the ministry of corporate affairs (MCA) filings accessed by Inc42, OYO has raised $506.75 Mn from SoftBank’s Cayman Islands-based subsidiary SVF Holdings. On the other hand, RA Hospitality Holdings has invested $300 Mn in the hospitality giant.

As part of this transaction, OYO has issued 9,626 and 5,699 preference shares to SoftBank and RA Hospitality Holdings respectively. The price per share for this deal stood at $52,643.22 along with a face value of INR 100 ($1.35). After the allotment of shares, while SVF Holdings will own 50.59% of the total allotted shares, RA Holdings will own 25.87% shares of OYO’s parent company Oravel Stays Private Limited. The development was first reported by Entrackr.

OYO had announced that about this $1.5 Bn deal in October 2019. The company had said that in the Series F round, RA Hospitality Holdings’ will infuse approximately $700 Mn as primary capital in the company, with the balance $800 Mn being supplemented by other existing investors.

The funding has come just after OYO made headlines globally for its restructuring plans which led to mass layoffs across the 80 countries it operates in. Over the last two months in 2020, OYO has laid off around 10K employees globally. But Agarwal is hopeful about the future and said the company is also prioritising improved relations with hotels and stronger corporate governance.

Founded in 2013 by Agarwal as a hotel chain, OYO has grown to a franchisee model. Its verticals vary from holiday homes, casino hotel and coworking spaces to budget hotels, corporate stays and more.

As far as the financial health of the company is concerned, OYO had posted a revenue of INR 6619.26 Cr in FY19, with expenses of INR 8946.8 Cr leading to a loss of INR 2332.7 Cr. In the Y-o-Y comparison, revenue has grown 3.5X, with 3.8X jump in expenses resulting in 5.47X higher losses.

From the Indian operations, OYO earned INR 3749.13 Cr in FY19 with expenses of INR 4204.6 Cr leading to a loss of INR 455.5 Cr. In Y-o-Y comparison, the revenue has grown 1.84X, with 1.58X increase in expenses with a 46% increase in losses.

Even after the increased losses of the company, OYO has started discussions to offer its network of hotels as quarantine centres for suspected Covid-19 cases as well as those who have to compulsorily self-isolate themselves. The company had said that the service would be offered at an affordable rate.