Forget about the crash in the Indian equity market. Indian hospitality start-up OYO has raised a massive $1 billion (Rs 72.63 billion) from four existing investors led by SoftBank. The latest fundraising is estimated to value OYO, which operates in the budget hospitality space, at around $5 billion (Rs 363 billion), a five-fold increase since September last year, when the last funding round took place. OYO was not even a unicorn (a start-up valued at $1 billion and above) before this funding round.
This e-series funding round makes OYO the most valued hospitality company in the country, ahead of Tata Group’s Indian Hotels Company (which owns the Taj brand of hotels) and EIH (which owns the Oberoi brand of hotels). BSE-listed Indian Hotels and EIH have a market cap of Rs 147 billion and Rs 87 billion, respectively.
Besides SoftBank, which owns a majority stake in OYO, the three other existing investors-Lightspeed Venture Partners, Sequoia and Greenoaks Capital- also participated in the latest funding round. OYO said it has already raised $800 million from these four investors and received commitment for an additional $200 million, bringing the total to $1 billion in this round. JP Morgan is acting as the exclusive financial advisor to OYO on this fundraising.
Ritesh Agarwal, the 24-year old founder and chief executive officer of OYO told Business Standard that it made sense for the company to raise this money from existing investors including SoftBank who have shown great faith in the business and have always supported growth plans. OYO, which operates more than ten thousand hotels in over 350 cities across five countries, had about $150 million on its books already. With this funding, the total cash with the company is estimated to be about $1.15 billion.
OYO started its journey in May 2013 with a single hotel in Gurgaon and it now has about 211,000 rooms under management. Of this 120,000 rooms are in India, followed by 87,000 in China and the rest in the United Kingdom, Malaysia and Nepal. “We have an opportunity to grow bigger and become one of the top hospitality brands globally. This capital gives us the fire power to do that. We are just getting started,” Agarwal said.
He said the company is adding 40,000-45,000 rooms every month between China and India. “We are today the world’s fastest growing hospitality brand, expanding faster than IHG or Marriott,” he added. The company will continue to explore newer businesses while remaining focused on both organic and inorganic growth.
“In the last 12 months, we have increased our international footprint by entering in China, Malaysia, and 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,” he said.