Venture capital firms Lightspeed Venture Partners and Sequoia Capital are selling shares in Oyo, the India-based short-term accommodation platform also backed by telecommunications conglomerate SoftBank, through a $1.5bn buyback, the Economic Times reported today.
News of the buyback scheme, which is being led by founder and chief executive Ritesh Agarwal, follows reports on Saturday that Oyo was also seeking to raise $700m in primary funding that would consist of an unspecified mix of equity and debt financing.
Financial services firm Nomura is thought to be part of the $700m deal, as are undisclosed family offices and other financial institutions. Unnamed existing backers are thought to be mulling a separate $800m investment, according to ET.
Oyo has built an online platform that allows consumers to book rooms in partnered hotels that carry Oyo branding and which boast standardised amenities, while personnel dubbed Oyo Captains offer on-site concierge services.
The company has also launched an offering dubbed Townhouse, a network of hotels specifically aimed at millennials that offer features such as free high-speed internet access and large televisions with Netflix.
The company initially focused on India, but its portfolio has since grown to more than 23,000 hotels across 800 cities in 18 countries.
Lightspeed is set to make a 50-fold return on its $20m investment in Oyo according to ET, selling a 6.9% stake in return for an estimated $1bn, leaving it with a 6.5% stake. Sequoia, which has invested $27m to date, will reportedly sell a stake sized at about 4.7% for $500m, retaining a 5.5% stake.
SoftBank and prospective new investors entered discussions with Oyo last month about a $1bn commitment for the company, though it is unclear how that relates to the news from the past several days. Oyo had previously raised at least $1.55bn in overall funding.
Short-term accommodation rental service Airbnb provided between $100m and $200m in funding for Oyo in April 2019, two months after ride hailing platform Didi Chuxing injected $100m to close a $1bn round.
Thar $1bn round also included an $800m investment from SoftBank’s Vision Fund, Sequoia and Lightspeed in September 2018, and a $104m contribution from on-demand ride provider Grab in December.
SoftBank led a $100m series B round for the company in 2015, with participation from Lightspeed, Sequoia and Greenoaks Capital. SoftBank returned to supply $62m in 2016 before leading a $250m round in 2017 that included Lightspeed, Sequoia, Greenoaks and insurance and aerospace company Hero Enterprise.
Hotel chain China Lodging Group subsequently added $10m to Oyo’s coffers later in 2017 as part of a strategic collaboration agreement.
