India-based short-term accommodation platform Oyo is looking to raise $1.5bn in a series F round backed by telecommunications and internet conglomerate SoftBank, TechCrunch reported today.
Ritesh Agarwal, Oyo’s founder and chief executive of Oyo, is set to invest $700m in the round. Reports of the series F first emerged in June 2019 and venture capital firms Lightspeed Venture Partners and Sequoia Capital India are also set to participate in the round, which would value Oyo at $10bn.
Founded in 2013, Oyo operates a networked of leased and franchised hotels where customers can book rooms that offer standardised amenities. It also maintains an offering called Townhouse, which is similar to its core service but chiefly aimed at millennials.
Oyo initially concentrated on its domestic market but has since expanded to more than 1.2 million rooms across 800 cities spanning 18 countries.
The company acquired hospitality chain Leisure Group in May 2019 for $415m to drive its European expansion before buying the Hooters Casino Hotel in Las Vegas for approximately $135m last month in a bid to strengthen its position in the US.
The series F proceeds will allow the company to increase its footprint in the US and in Europe. It will also reinvest a significant portion of its $2bn balance sheet into continued growth.
The round follows the announcement of a $1.5bn buyback scheme four months ago led by Agarwal that allowed Lightspeed and Sequoia Capital to partially exit. Agarwal said at the time he intended to spend $2bn through investment vehicle RA Hospitality Holdings to grow his stake from 10% to 30%.
Oyo has already raised approximately $1.5bn altogether. Holiday accommodation rental service Airbnb provided between $100m and $200m for the company in April 2019, following a $1bn round closed two months earlier.
SoftBank’s Vision Fund contributed to an $800m first close in September 2018 together with Sequoia Capital and Lightspeed, before Grab added $104m in December and fellow ride hailing service Didi Chuxing invested $100m in February this year.
Hotel operator China Lodging Group supplied $10m in funding for Oyo September 2017, after SoftBank led a $250m round a month earlier that also featured insurance and aerospace company Hero Enterprise as well as Lightspeed, Sequoia India and Greenoaks Capital.
SoftBank also invested $62m in the company in 2016, after having led a $100m series B round the previous year that included contributions from Lightspeed, Sequoia India, Greenoaks Capital, DSG Consumer Growth and Venture Nursery.
