Oyo Rooms seeks to raise $500 mn from SoftBank, likely to join unicorn club
If the deal fructifies, SoftBank's shareholding in Oyo Rooms would top 50 percent
Oyo Rooms is in talks with SoftBank, which holds 26 percent in the company, to raise $500 million, according to media reports. If the funding materialises, the hotel aggregator is expected to join the unicorn club, or startups that are valued at $1 billion or more.
According to a report in The Economic Times SoftBank Vision Fund’s investment could likely value the Gurgoan-based start-up at $1.2 billion or Rs 8,000 crore. In the last round of funding in July 2016 which saw SoftBank investing Rs 413 core, Oyo as valued at $460 million.
If the deal fructifies, SoftBank's shareholding would top 50 percent, says the reports.
According to a source cited in The Economic Times report, the company is getting a pre-money valuation of $700-750 million. Pre-money valuation refers to the valuation of a company or asset before getting an investment or financing.
The fund infusion, which is expected to be done in tranches, will give Oyo the required warchest to take on completion such as Makemytrip, Ibibo and Bookings.com. The company has a network of 7,000 hotels and 70,000 rooms in 200 cities at present.
According to a report in The Times of India, the focus of the expansion is likely to be Townhouse, which services the mid-premium segment and not budget segment. The company is likely to introduce 200-250 Townhouse properties across the nation by December this year.
Oyo Rooms was founded in 2013 by Ritesh Agarwal, a college dropout at 17, who became a millionaire at 22, with Oyo Rooms. In 2016, he had figured in Forbes India's 30 Under 30 list of entrepreneurs.
Both Agarwal and SoftBank have offered no comments on the development.