Oyo Creates $1.5 Billion War-chest To Conquer US, Europe; Valuation Soars To $10 Billion

Oyo Creates $1.5 Billion War-chest To Conquer US, Europe
Oyo Creates $1.5 Billion War-chest To Conquer US, Europe

On Monday OYO, Hospitality firm said that they will be raising $1.5 billion as part of the latest round of funding. The funding will be used to expand into foreign markets such as the U.S. and Europe.

How Will They Utilize This funds?

The Plan is to utilize this funding for expansion in the US and also strengthen its vacation rentals business in Europe. 

According to OYO, the RA Hospitality Holdings will invest around $700 million as primary capital in the company as part of the Series-F funding. 

 Ritesh Agarwal, OYO Hotels and Homes Founder and CEO (Global) will spend $700 million to buy new shares in the company as part of a previously reported $2 billion plan to triple his ownership stake.

The balance $800 million being supplemented by other existing investors which includes SoftBank’s Vision Fund, Lightspeed Venture Partners and Sequoia India.

Expansion in Abroad

They plan to divert A significant part of the funding towards continued growth in OYO’s fastest-growing market – the United States.

Agarwal said, “We truly believe that we will be able to build a truly global brand out of India, while ensuring that the business is run efficiently and with a clear path to profitability,”. 

Which in turn will strengthen the company’s position in the vacation rental business in Europe.

The company has the continued support of its investors like Softbank Vision Fund, Lightspeed and Sequoia Capital to its commitment of “making #LivingTheGoodLife a reality for over 3.2 billion middle-income people around the world,” said  Ritesh Agarwal.

He added, “With the Competition Commission of India (CCI) approval now in place, the company will get a capital infusion of approximately USD 1.5 billion for this mission, supported by me and other shareholders,”.

What Is The Plan Of Action?

Ritesh Agarwal, The young founder made headlines in July when he shared his plans to spend $2 billion to raise his stake in the company from about 10% to 30%.

According to sources, Japanese banks Mizuho Financial Group Inc. and Nomura Holdings Inc. are financing Agarwal’s share acquisition.

For doing that he is buying some of the shares from Sequoia and Lightspeed and then will carry out the transaction through an entity called RA Hospitality Holdings.

About Oyo’s Expansion

This startup was founded by Ritesh Agarwal in his teen years only after dropping out of college and travelling the whole country on a tiny budget.

While his stay in different hotels and guest houses, he got inspired to start the online service, and his company now conspires to provide travelers a consistent experience.

The company primarily deals with hotels owners and apparently help them in upgrading their services from bathroom fittings to furniture and bedding, and then provides them standardized supplies like sheets and toiletries, and support to train their staff.

Hundreds of employ work for the company to evaluate properties on some 200 factors, from the quality of mattresses and linens to water temperature. 

To get a listing, along with a bright red Oyo sign to hang street-side as a seal of housekeeping approval, most hoteliers must agree to a makeover that typically takes about a month. Oyo then gets a cut of roughly 25% of every booking. Rooms usually run between $25 and $85.(reference Bloomberg)

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