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SoftBank-backed Oyo is in the market to raise about $1bn; looming deal will spawn another Indian unicorn

Oravel Stays Pvt. Ltd, the operator of hotel chain Oyo Rooms, is in the market to raise funds and an impending deal could help create India’s most valuable hospitality firm.

Oyo is reportedly in talks with two consortia to raise between $500 million and $1 billion.

The Gurugram-based budget hotel chain has kicked-off negotiations with a consortium of the SoftBank Vision Fund and US-based co-working giant WeWork, and with a clutch of US-based strategic investors targeting the travel space, according to The Economic Times.

 SoftBank-backed Oyo is in the market to raise about <img class=

A file photo of Ritesh Agarwal, Founder, Oyo Rooms.

A deal is expected to value the firm at between $4.5 billion and $5 billion, the newspaper added. A $4.5 billion valuation translates to over Rs 31,000 crore as on date.

By comparison, the BSE-traded Indian Hotels Company Ltd., which operates the Taj Group of hotels, has a market capitalisation of roughly Rs 14,728 crore. And the BSE-traded EIH Ltd., which operates hotels under the Oberoi and Trident brands, has a market cap of about Rs 9,922 crore, according to stock market data.

A part of the funds raised from this round will be deployed in China, where Oyo is busy expanding its footprint.

Earlier in the week, Oyo announced the acquisition of wedding banquet company for an undisclosed amount. The purchase is a step towards the company expanding to the real estate sector, Oyo said in a statement, reported the PTI.

"What this partnership facilitates is combining OYO's capabilities of asset management and technology with the scale offers in India's fragmented USD 40 billion weddings industry," Chief Strategy Officer Maninder Gulati was quoted as saying.

Unicorn hunter

Earlier in the month, Japan’s SoftBank, the largest shareholder in Oyo with a near 45 percent stake in the Indian firm, told CNNMoney that the Japanese conglomerate is now “a unicorn hunter”.

Oyo’s other major shareholders include Lightspeed Venture Partners with a 15 percent stake and Sequoia Capital India with a roughly 11 percent stake. Oyo founder Ritesh Agarwal reportedly has a near 12 percent stake in his company.

Oyo has operations in India, Nepal, Malaysia and China. Oravel Stays was founded in 2011.

With inputs from PTI

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Updated Date: Aug 16, 2018 21:11:37 IST