This Gurgaon-based startup, which is now aggressively expanding in China, is in talks with two associates— a combination of SoftBank Vision Fund and co-working giant We-Work, and a set of US-based strategic investors in the travel space. A pre-money valuation above $4 billion would vault Oyo, founded by 24-year-old college dropout Ritesh Agarwal some 5 years ago, to the same league as of Flipkart and Paytm.
Three people familiar with the developments going on have confirmed that Oyo is all set to raise up to $1 billion that could push them into an overall evaluation of $4 billion. From 850 million $ evaluation last year, this round of investment will turn the tables for Oyo.
The Expansion Plan
Apart from expanding its footprints within the country, Oyo is going a big way in the China market especially.
The funds will be used to strengthen its position in China and also expand into other South East Asian and Middle Eastern Countries.
Earlier this month, Oyo said in a statement that it had expanded in China and had 50,000 rooms in the country across 50 cities, having started operations there nine months ago.
“If Oyo has to make an impact in China, they have to do it in a big way. It’s a large market and they have to put a lot of feet on the ground, understand the local ways of doing business, understand the consumer, and build a brand. That requires a lot of money and (OYO) will have to raise a substantial sum to be successful,”
said Harish HV, a consultant and until recently a partner at Grant Thornton India. “They have been working on their China strategy for the last 2-3 years and it’s fair to assume that they have all the basic building blocks in place,” he added.
India Foothold
In India, with over 100,000 exclusive rooms under its kitty and a presence in 230 cities, Oyo says they are close to reaching profitability. In a span of 6 months from January to June, Oyo locked in 17 million booked room nights.
The Future
Japan’s SoftBank is already the largest shareholder in Oyo, holding around 45% shares and other major shareholders are Lightspeed Venture Partners with 15% and Sequoia Capital India with around 11% while Ritesh Agarwal himself holds 11-12% shares in the company.
In recent months, SoftBank chairman Masayoshi Son has, on multiple occasions, praised both Oyo and Agarwal, describing Oyo as a “next-generation hotel company” that is undertaking the “the most advanced hotel management” globally. Going at this speed, Oyo is all set to become a household name when it comes to hotel managing systems.
