Oyo Rooms is reportedly in talks to raise around $300-500 million in funding. As per ETTech, the company is in talks with SoftBank for the investment. If the deal goes through, it will be the biggest funding deal for an India-based startup since November 2015. Also, with the funding, Oyo Rooms will enter the “unicorn” club as its valuation will rise to $1.2 billion.
A source aware of the development told ET:
Besides SoftBank, other new or existing investors may also invest in the round. Oyo is getting a pre-money valuation of $700-750 million.
The new pre-money valuation is a significant increase from its earlier valuation. Oyo was valued at $460 million when it last raised about $62 million capital in August 2016.
With this investment, SoftBank will likely hold more than 50 per cent stake in Oyo Rooms. It is already an investor in Oyo, having invested $120 million across two rounds in 2015 and 2016 for over 25 per cent stake in the company.
The final outcome of the deal will be dependent on how much the company and its existing investors are willing to dilute. A second source said the capital will most likely be infused in tranches, but this could not be confirmed.
The funding will help Oyo further expand its network of 7,000 hotels and 70,000 rooms in 200 Indian cities. A key component of the expansion plans will now be its new initiative called Townhouse, which targets the mid-premium segment as compared to the budget segment. Oyo is taking properties on lease in order to control customer experience in Townhouse Properties, four of which have already opened in Delhi and the Gurgaon area.
With the new funding round, the company plans to introduce 200-250 Townhouse properties across the country by end of this year. The company has also started international expansion, starting with Malaysia followed other geographies later.
Oyo Rooms, founded in 2013 by Ritesh Agarwal, is a technology driven chain of standardized budget hotels in over 200 Indian cities and over 6500 hotels. The company’s vision is to standardize and build efficiency into all forms of real estate such as budget hotels, apartments, guest houses and resorts.