Oyo creeping closer to $10Bn valuation with new $1Bn funding round

Having led the last four funding rounds for Oyo since 2015, SoftBank now holds more than 46% stake in the company after investing $1 billion.

Oyo Hotels & Homes is in talks for a fresh round of funding, which is likely to see the seven-year-old startup’s valuation hit the $10-billion mark. This will make it one of the most valuable new-economy ventures from the country, according to three sources familiar with the development. The Gurgaon-based company, founded by a teenaged Ritesh Agarwal (now 25) in 2012, is in talks to raise about $1 billion in fresh capital, for which it is in discussions with both new investors and existing backers like SoftBank.

“They are looking at a valuation of around $10 billion for the new round, for which they will hit the road next quarter,” said one of the sources mentioned earlier. “The company is looking at a new lead investor and there is high interest from both financial and strategic investors.”

The expected bump in the valuation and fund-raise comes at a time when Oyo has aggressively expanded into global markets, especially in China and Europe, making it the sixth largest hotel chain in the world. A majority of the revenues for the company also come outside India, as it has also expanded to Southeast Asia and Japan.

“This is speculation. Oyo Hotels & Homes has a very healthy balance sheet and we are not in talks with any investors. We don’t have any further comments,” said an Oyo spokesperson in response to an emailed query from TOI.

If the deal goes through, it will make Oyo the most valued startup along with Paytm, which was valued at $10 billion when it raised $300 million from Warren Buffett’s Berkshire Hathway in August 2018. Paytm is also in talks for a fresh round of funding, as reported by TOI in its March 28 edition, which would increase its valuation to $17-18 billion. Ride-hailing major Ola was recently valued at $6.2 billion, while education technology startup Byju’s is valued at $5.4 billion. 

Oyo was valued at $5 billion when it raised about $800 million from SoftBank in September 2018. Around $600 million of this was earmarked for China and expansion into other global markets. Since then, the company has been able to line up several strategic investors — like ride-hailing companies, including China’s Didi Chuxing and Southeast Asia’s Grab, who pumped in $100 million each.

The biggest win for Oyo came earlier this year when San Francisco-based home-sharing major Airbnb, which was one of the inspirations for Agarwal when he started out, invested $75 million in the company. 

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