Casa2 Stays Pvt. Ltd, which operates budget hotel chain FabHotels, will raise nearly Rs 40 crore ($5.6 million at current exchange rate) from existing investors through compulsorily convertible preference shares in a Series B2 round, according to a report.
Gurugram-based FabHotels will raise the money from United States-based Goldman Sachs, Accel and Singapore’s RB Investments at a valuation of Rs 856.4 crore (around $119.24 million), Entrackr reported, citing regulatory filings with the ministry of corporate affairs.
Both Accel and Goldman will invest around Rs 14.2 crore each into the budget hotel operator, while RB Investments has committed Rs 10.66 crore, the report said. Following the funding, Goldman will be FabHotels’ biggest shareholder with a 25.64% stake, while Accel and RB Investments will hold 24.68% and 18.72%, respectively.
VCCircle has reached out to FabHotels on the details of the latest investment and will update this report accordingly.
Other investors in FabHotels include Aarin Capital, Kalaari Capital, Tracxn Labs, Qualcomm Asia and Innoven Capital, according to VCCEdge, the data research arm of Mosaic Digital. In 2017, Goldman led a $25 million (around Rs 161 crore) Series B round in the company, with Accel also participating.
This round will come after FabHotels raised about Rs 54 crore in June 2019, which valued the company at about Rs 651 crore.
The budget hotel chain was founded by Vaibhav Aggarwal and Adarsh Manpuria in 2014. Aggarwal had previously co-founded Rocket Internet-backed online furniture e-tailer FabFurnish. He also had stints at Groupon and Bain & Company.
Manpuria had served as venture development associate at Rocket Internet Ventures and had worked with many of its portfolio companies, including FabFurnish, Foodpanda and Jabong.
FabHotels works on an asset-light model, wherein it uses the technology platform to promote its partner hotels with capacities of 20-40 rooms and provides standardised services to budget travellers. It also operates a professional training academy for hotel staff and quality control teams.
News of the company’s latest fundraise comes just a day after reports said that a competitor, Treebo, had raised a little over Rs 3 crore from Bennett Coleman and Co. Ltd., the owner of the Times Group.
Perhaps the biggest competition for every startup and player in the hotel space is SoftBank-backed Oravel Stays Pvt. Ltd (OYO). In November last year, it was reported that the startup would raise $1.5 billion (around Rs 10,651 crore) in a Series F funding round from founder Ritesh Agarwal. That development came after Agarwal in July said that he would deploy around $2 billion to raise his stake in the hospitality platform.