Ritesh Agrawal-founded Oyo Hotels and Homes is all set to raise $1.5 billion in funds from the founder, through his RA Hospitality Holdings and other investors led by SoftBank. This funding will lead the company to hold a worth of $1.5 billion, achieving the biggest target in its 6 years of history until now.
The ratio of this massive investment will be such that Ritesh’s RA Hospitality Holdings will spend approximately $700 million and the remaining will be aided by existing investors.
The founder in lieu of the Series F funding, also said that the company is growing and excelling in every way possible. As per the data provided, the EBITDA ( Earnings Before Interest, Tax, Depreciation and amortization) has been improved by 50 per cent. Moreover, the losses as a percentage of Net Realisable Value are also plunging resulting into a declining curve. This will lead to a secure an overpowering position in the vacation rental business in Europe.
With this, Ritesh Agrawal’s investment will be part of the $2-billion plan, announced earlier, to hold a threefold ownership stake. Moreover, prominent VCs like Lightspeed Venture Partners and Sequoia are selling part of their shareholding in Oyo to help Agarwal increase his stake. Other than this, Oyo had raised $1 billion a year ago, in September 2018, accounting to have a strong balance sheet, with over $2 billion. This round of fundraising had the participation of SoftBank, Lightspeed Venture Partners, Sequoia, and Greenoaks Capital, and strategic partners such as Airbnb.
Softbank, has infused nearly $1 billion in OYO, through its Vision Fund and owns roughly 45 percent stake in the hospitality and accomodations unicorn. This latest funding round is aimed at rapid growth in OYO’s fastest-growing market – the United States, and to also strengthen the company’s position in its vacation rentals business in Europe, as per a statement by OYO.
With the latest development, it is also important to note that Agarwal has moved from executive director to a non-executive director in Oyo’s India operations in order to take a more active role in the global operations of Oravel Stays Singapore. Also, the company has undergone wholesale corporate restructuring, which has led to setting up of some subsidiaries and bifurcating operations globally.
As per Agarwal, OYO has continued support of its investors like Softbank Vision Fund, Lightspeed and Sequoia Capital to its commitment of “making #LivingTheGoodLife a reality for over 3.2 billion middle-income people around the world”. He further added that –
With the Competition Commission of India (CCI) approval now in place, the company will get a capital infusion of approximately $1.5 billion for this mission, supported by me and other shareholders.”
The more proactive engagement of Ritesh is ought to bring OYO’s global business to move further and scale more as part of a natural progression. Moreover, the continued growth over the last couple of years and the opportunities in markets such as the US, Europe, China, and Southeast Asia is a step towards achieving the mission, while delivering on the fiduciary responsibility to Oyo’s investors by building a rational business.
The $10 billion valuation places Oyo amongst the list of most valuable startups in India after fintech unicorn Paytm and e-commerce giant Flipkart, which sold the majority of its stake to American retailer, Walmart last year for $16 billion. The growth of Oyo would also provide some comfort to SoftBank, which has seen some of its recent bets — in WeWork and Uber become not so great IPO stories.