SoftBank Group-backed Oyo in talks to raise Rs 1,000 cr from family offices

After withdrawing its application for an IPO last month, Oyo is set to hold an extraordinary general meeting (EGM) on Tuesday to approve the fundraising after increasing its authorised share capital

Hospitality chain Oyo is in talks to secure around Rs 1,000 crore, primarily from the family offices of prominent Indian corporate executives and stock market experts, according to sources cited by The Economic Times.

The potential investors include corporate strategy advisor Anand Jain, Mankind Pharma promoter brothers Ramesh and Rajeev Juneja, and Utpal Sheth, a close associate of the late market expert Rakesh Jhunjhunwala, the report added.

After withdrawing its application for an initial public offering (IPO) last month, Oyo is scheduled to hold an extraordinary general meeting (EGM) on Tuesday to approve the fundraising after increasing its authorised share capital.

The proposed fundraising round is expected to value the company at around $2.5 billion, a 72 per cent decrease from its peak valuation of $9 billion in 2021, marking the deal as a significant down round.

The SoftBank Group-backed company is also nearing the completion of negotiations with the Malaysian sovereign wealth fund, Khazanah Nasional, which is currently discussing specific rights before finalising the agreement, the report said.

The report cited a source as saying, "The order book from family offices is now approximately Rs 1,000 crore. Oyo intends to allocate a portion to Khazanah Nasional, as its status as a sovereign wealth fund enhances the credibility of the capital table."

Initial round of Rs 500 crore

The report also mentioned that the company will consider approving an initial fundraising of around Rs 500 crore. The total funding, including contributions from family offices and institutional investors, is expected to be finalised by the end of the month, the report cited a source as saying.

On average, most cheques will range between Rs 15 crore and Rs 30 crore, though some may be higher, and investors who enter at this valuation can still achieve significant returns if there is an IPO at a higher valuation, a source said, as cited by the report.

Oyo's profit in FY24

On May 30, Chief Executive Officer (CEO) Ritesh Agarwal announced that the company achieved its first annual net profit of Rs 100 crore for FY24.

During recent meetings with investors, the startup projected a gross booking value of $1.8 billion for FY25, following a closure of FY24 at $1.2 billion. In FY23, the company's gross order value growth remained flat. For FY25, it has forecasted revenue of $957 million, up from $657 million in FY24.

In India, the company primarily provides hotel aggregation services, while in Europe, it focuses on the home rental market, having acquired Amsterdam-based Leisure Group in 2019. It holds 95 per cent of its storefronts in key growth markets such as India, Europe, Malaysia, and Indonesia, and has significantly reduced its presence in regions such as the US and China, the report said.