SUMMARY
The round may be led by SoftBank
Fresh funds will be used towards massive diversification
Ritesh Agarwal is buying back $1.5 Bn worth shares from existing investors
Gurugram-headquartered hospitality decacorn OYO Hotels and Homes is said to be in talks for fresh funding round between $750 Mn-$1Bn.
A Business Standard report, citing company executive, said that the round may be led by SoftBank. The round is expected to value the company at $13.5 Bn-$15 Bn. The fresh funds are expected to be spent towards massive diversification and for the management and operation of its five-star and luxury properties across the globe.
It is to be noted that the company earlier raised $1.7 Bn from multiple investors such as Airbnb, SoftBank, Lightspeed India, Sequoia Capital among others. The company is also raising $1.5 Bn from founder Ritesh Agarwal, who is buying back shares from existing investors— Lightspeed and Sequoia. This catapulted the company’s valuation to $10 Bn.
OYO’s last billion-dollar round was in September last year, led by SoftBank. Masayoshi Son-led group has been one of the major investors in the company, however, OYO has restricted SoftBank’s stake in the company.
Article 21.6 of OYO’s Articles of Association prohibit SoftBank from, directly or indirectly, acquiring more than 49.99% of the fully diluted share capital of the company, without the consent of Agarwal, Greenoaks, Lightspeed and Sequoia Capital. The restrictions were included following a negotiated shareholder agreement arrived at during SoftBank’s Series D investment in OYO.
Founded in 2013 by Agarwal, OYO has grown to a franchisee model. The company has expanded its services to more than 800 cities in 74 countries, including the US, Europe, UK, India, Malaysia, Middle East, Indonesia, Philippines, and Japan.
Last week, OYO has also announced its expansion to Las Vegas in the US in partnership with Highgate. Its verticals vary from holiday homes, casino hotel and coworking spaces to budget hotels, corporate stays and more.
OYO reportedly claims to have a strong balance sheet with over $1.5 Bn, and has seen a 4.4x YOY growth in revenue in June 2019. Earlier, talking about profits, Agarwal reportedly said, “Given how we continue to make forward-looking investments in the form of Capex support to our asset owners, developing our technology, onboarding pricing, revenue management, talent acquisition, training and developments at the group level, we are not profitable yet.”
The company’s multiple funding rounds aren’t much of a surprise as it continues to be a heavy capital expenditure-based business. Further, with global expansion coupled with issues at home with protests as well as legal trouble, OYO definitely has various battles across the horizon.
