Oyo raises $1.5 billion at $10 billion valuation; to focus on US market

Ritesh Agarwal, Oyo founder
Oyo Hotels & Homes is raising $1.5 billion from founder Ritesh Agarwal (pictured) and investors led by SoftBank, valuing it at $10 billion, reaching a big milestone in its 6-year history.

Of the $1.5 billion, Agarwal’s RA Hospitality Holdings will spend approximately $700 million and the rest will be supplemented by existing investors.

A significant part of the Series-F funding will be diverted in boosting the US footprint, and in strengthening the position in the vacation rentals business in Europe. 

“On a year-on-year basis, we have seen that not only are we operating profitably at the building level but at the same time our Ebitda (earnings before interest, tax, depreciation and amortisation) has also improved by 50 per cent. The losses as a percentage of NRV have also been on a steady and significant declining curve. 

Our immediate goal is to make forward-looking investments so we can achieve our mission, while delivering on our fiduciary responsibility to our investors by building a sustainable business,” Agarwal, founder and CEO (global), Oyo, said.

Agarwal’s investment will be part of the $2-billion plan, announced earlier, to treble his ownership stake. Lightspeed Venture Partners and Sequoia are selling part of their shareholding in Oyo to help Agarwal increase his stake.

Oyo claims to have a strong balance sheet, with over $2 billion. Oyo had raised over $1 billion in September 2018. This fundraising saw participation from SoftBank, Lightspeed Venture Partners, Sequoia, and Greenoaks Capital, and new strategic partners like Airbnb.

Oyo has undergone wholesale corporate restructuring, setting up several subsidiaries and bifurcating operations globally. Agarwal has moved from executive director to a non-executive director in Oyo’s India operation to allow him to take up a more active role in the global operations of Oravel Stays Singapore. 

“It is our ultimate holding entity for all our global operations. My deeper engagement in the global business is a natural progression, given our continued growth over the last couple of years and the opportunities in the US, Europe, China, and Southeast Asia,” Agarwal had recently told Business Standard.

Fast Facts

Number of countries where present: 80 plus
China:  338 cities and over 590,000 rooms 
Indonesia: 100-plus cities and over 27,000 rooms 
US: 60 cities and over 7,500 rooms

3.8x YoY growth in revenue in Aug 2019 (vs Aug 2018) 
Total rooms: 1.2 mn under management 

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