Source: Oyo Website

Hospitality firm Oyo is currently in talks to raise a strategic round of investment from tech giant Microsoft, at a valuation of $9 billion, TechCrunch reported. The final closure may come into being in the next few weeks, although the exact size of the round has not yet been ascertained.

This comes even after Chinese ride-hailing service Didi Chuxing, US-based hospitality aggregator Airbnb, and Southeast Asian ride-hailing platform Grab on-boarded the bandwagon of becoming strategic investors at the Indian startup, which is already backed by investment giant SoftBank.

Oyo had recently raised funds worth $660 million, in a debt financing round that has since been closed. The round was led by investment firms like Citadel Capital Management, Fidelity Investments, and Varde Partners, and the group hopes to use the sum for retiring some of its previous debts, while also expanding its product technology and operations.

The fundraiser with Microsoft Corp. comes ahead of the planned initial public offering (IPO) of the startup, which Chief Finanical Officer Abhishek Gupta had said is slated to take place soon enough. Gupta had added, “As you know, there’s a lot of nuts and bolts and background work that needs to be done. Our audit committee and board has asked us to be ready for the public market event by the end of this year and after that it will be a combination of looking at the overall COVID recovery, the market appetite, market readiness as well as our internal readiness. We have not put a time or date.”

Oyo seems to have been one of the worst-hit startups in the country amid the pandemic, thanks to the persistent lockdowns and travel restrictions. Its valuation, which had once stood at $10 billion, fell down to just $3 billion post the pandemic. CEO Ritesh Agarwal had expressed the firm’s disappointment over the decline, saying, “We built something for so many years and it took just 30 days for it drop by over 60%.” However, as the firm grapples to regain its place as a market leader, investors are making a beeline to invest in it, so as to ensure good returns on a promising venture.

As for Microsoft, this isn’t the first time that the Satya Nadella-led tech biggie has put its money in an Indian startup. Back in 2017, it had invested in online retail giant Flipkart, in what was to serve as the first of a number of investments into Indian firms. The time around, if the deal is successful, Oyo might also be seen moving towards Microsoft’s cloud services. However, neither of the two companies have commented on the matter as of now.

Oyo has recently faced multiple accusations of improper treatment and deteriorating relationships with its hotelier partners, as well as insolvency, especially in recent quarters. It remains to be seen if the new slew of investments will lead to a change in attitude.