In another instance of OYO’s acquisition strategy for growth, the Gurugram-based hospitality decacorn with SoftBank Group has reportedly acquired a Japanese apartment rental company, MDI.
A Nikkei Asian Review report cited sources saying that the joint venture of OYO and SoftBank Group in Japan has acquired an 80% stake in MDI for $100 Mn. The deal is said to benefit OYO in leveraging MDI’s strong network and business development capabilities in Japan’s real estate market.
Following the acquisition, OYO will list a section of 37,000 rooms under MDI management on its room rental platform. It will supplement the company’s existing inventory of more than 2,000 rooms in Japan. MDI recently posted revenues of about $1 Bn in the fiscal year ending March 2019, according to the report.
In February, OYO announced that it has partnered with Yahoo Japan for a joint venture, OYO Technology and Hospitality Japan, to start its co-living service OYO Life. OYO Life lets users find, rent, and leave apartment rooms via a smartphone app and targets millennials who prefer to rent rather than buy properties. The Indian company owns 66.1% of the joint venture.
In April 2019, the company began its operations. During the launch, OYO had said that it will not charge brokerage fees or additional fees such as security deposits for the service. The monthly rental prices will range from $180 (¥20K)- $7,218 (¥800K) as it targets 1,000 listings in Tokyo’s prime areas by March-end.
Apart from the rental service, OYO also introduced a subscription-based membership programme, OYO Passport, which will offer discounts and deals from the corporate partners in Japan.
In India, OYO LIFE was launched in October 2018 and claims to have more than 500 buildings and 30K live beds. The company says it is adding over 5K new beds every month. Currently, OYO LIFE is present in four cities in India – Delhi, NCR, Pune, Bengaluru and is rapidly expanding its base to four more cities – Hyderabad, Chennai, Kolkata and Mumbai.
Recently, the company announced its foray into student accommodation by tying up with marquee institutes like IIT Delhi and Plaksha University’s Fellowship programme in Gurugram and will be managing over 500 beds for the student community.
The Ritesh Agarwal-led six-year-old company is backed by marquee investors such as SoftBank, Lightspeed, Sequoia Capital etc and has raised $1.7 Bn already. The company has expanded its services to more than 800 cities in 80 countries like the US, Europe, the UK, India, Malaysia, Japan and Indonesia, among others.
Moving into a new property in Japan involves a number of expenses, and includes up-front payment for a number of months. The average rent for a one-bedroom apartment in central Tokyo is around JPY 127,000 ($1,120) per month.