OYO raises $800 mn in financing round led by SoftBank Investment Advisers

Sangeetha Chengappa Bengaluru | Updated on September 25, 2018

Ritesh Agarwal – Founder & CEO, OYO

OYO, South Asia’s largest hotel chain, has raised a total of $800 million in the latest financing round led by SoftBank Investment Advisers (SBIA) through SoftBank Vision Fund, with participation from existing investors, Lightspeed Venture Partners, Sequoia and Greenoaks Capital.

OYO Hotels also confirmed that it received a commitment of an additional $200 million, bringing the total to $1 billion in this round. This fund-raise would place the post-money valuation of OYO at $5 billion, says sources.

Speaking about the development, Ritesh Agarwal – Founder & CEO, OYO said, “In a short span of time, OYO Hotels has grown to become the most-preferred hotel brand in both the economy and mid-market segments. We have already started expanding our presence to newer segments, with OYO Home, OYO Townhouse, and more recently, Palette Resorts by OYO. We will continue to explore newer businesses, while remaining focused on both organic and inorganic growth."

In the last 12 months, OYO has increased its international footprint to five countries - India, China, Malaysia, Nepal, and more recently in the UK. "With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent. We will also deploy fresh capital to take our unique model that enables small hotel owners to create quality living spaces, global.”

OYO India has over 1,25,000 rooms and is witnessing 3X growth in transactions year-on-year, with margins at over 20 per cent. In addition to attaining unit-level profitability, the company benefits from 90 per cent demand coming from its direct channels, improving operating efficiencies and customer loyalty, with over 67 per cent of the top line in India coming from repeat customers.

OYO China, on the other hand, has a presence in 171 cities with over 87,000 rooms, in over 10 months since its foray into the market. With both the home markets, India and China, on a steady performance trajectory, the company will continue to expand its presence globally.

The company will direct a significant part of the funds from this round of financing, approximately $600 million, into strengthening its position in China, which is still in the early stages of growth, while the rest will go into maintaining its leadership position in India and expansion into new markets.

Published on September 25, 2018

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