India-based short-term accommodation services provider Oyo is in line to receive between $100m and $200m in funding from accommodation rental platform Airbnb, The Information reported on Monday, citing people familiar with the matter.
The deal could fall apart, the sources cautioned, as investing in an overseas business would require complex tax filings for US-headquartered Airbnb. Oyo has allegedly also been approached by other interested parties about an investment, which could frustrate Airbnb’s efforts.
Founded in 2013, Oyo partners existing budget hotels and takes over rooms that it refurbishes to a certain standard, installing amenities such as free wifi and flatscreen televisions, and making them available to book through its online portal.
The company’s network currently consists of upwards of 8,500 hotels across more than 500 cities in India, Nepal, China, Indonesia, Malaysia and the United Arab Emirates.
Should it go ahead, the Airbnb investment would help Oyo accelerate its international expansion efforts. It committed $600m to its operations in China, where it is already present in 285 cities, in December 2018 together with another $100m to support growth in Indonesia.
For its part, Airbnb is said to be considering the deal as a way to boost its exposure to the hotel industry. The corporate acquired hotel booking portal HotelTonight for a reported $440m earlier this month.
Oyo has secured a total of $1.45bn in funding to date. It closed a $1bn round last month after ride hailing service Didi Chuxing supplied $100m through its Star Virtue Investment unit, after on-demand ride platform Grab provided $104m in funding in December 2018.
SoftBank Vision Fund, the near-$100bn vehicle managed by telecommunications conglomerate SoftBank, led the round at a valuation of $5bn, after injecting an initial $800m in September 2018 alongside VC firms Sequoia Capital and Lightspeed Venture Partners.
The company had already received $100m in a 2015 series B round led by SoftBank, with participation from returning backers Lightspeed, Sequoia Capital India and Greenaoks Capital.
SoftBank committed a further $62m in 2016, before Vision Fund led a $250m round that included insurance and aerospace component supplier Hero Enterprise, Lightspeed, Sequoia and Greenoaks in September 2017. Hotel management firm China Lodging Group contributed $10m the same month.
Oyo’s backers also include Venture Nursery, while DSG Consumer Partners sold its stake as part of the $1bn funding round in December 2018, making a four-times return on its investment.
