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Oyo raises $250 mn in Series D round from SoftBank, Hero promoters & others

07 September, 2017

Branded budget hotels marketplace OYO has raised $250 million (Rs 1,600 crore) in a Series D round of funding led by existing Japanese investor SoftBank Group Corp.

The Japanese telecom and Internet conglomerate invested in OYO, owned and operated by Gurgaon-based Oravel Stays Pvt. Ltd, through its SoftBank Vision Fund.

SoftBank’s additional investment into OYO comes after it pumped in $2.4 billion into Indian e-commerce company Flipkart, $1.4 billion into Paytm and about $250 million into cab aggregator Ola earlier this year.

SoftBank Vision Fund is the world’s largest private equity fund and has raised $93 billion from investors including Saudi Arabia’s main sovereign wealth fund, Apple Inc, Qualcomm, Taiwan’s Foxconn Technology and Japan’s Sharp Corp.

OYO said in a statement that its other existing investors Sequoia Capital India, Lightspeed Venture Partners and Greenoaks Capital also invested in this round. Hero Enterprise joined the round as a new investor.

The company will use the funds to expand its presence to Southeast Asia, strengthen its team and enhance its technology backbone.

Founder Ritesh Agarwal said the company is focusing on accelerating its network coverage to consolidate its leadership in the economy category through OYO Rooms and the mid-market category through Townhouse brands. “We will also deploy fresh capital to take our made-in-India business model to international markets which are characterised by a similar supply-demand imbalance in real-estate and hospitality,” he said.

Agarwal claimed that the company meets 95% of demand through its own channels, so it doesn’t have to pay commissions to third parties.

The company operates OYO Rooms, the economy brand in the marketplace model, and Townhouse, a managed hotel brand. Townhouse was launched in January, and is positioned as a friendly neighbourhood hotel.

The firm operates in more than 230 cities across India, Malaysia and Nepal.

OYO recently said that it narrowed its losses for the financial year ended March 2017 to Rs 325 crore from Rs 496 crore in the previous year.

While it did not disclose its revenue figures for the fiscal year, the hotel aggregator said its gross booking value run rate had risen to $400 million annually in the quarter ended June 2017.

The Times of India had recently reported that the company will be valued at $850 million after this funding round.
According to VCCEdge, the data research platform of News Corp VCCircle, OYO was valued $396-400 million in 2015, when it had raised $100 million from SoftBank.

Subsequently, in August 2016, it had raised another $90 million in a round led by SoftBank. According to the company’s filings with the Registrar of Companies, its share price was 3.5% higher than the 2015 transaction, taking its post-money valuation to a little over $500 million.

OYO competes with Treebo and FabHotels, besides online travel services providers such as MakeMyTrip and Yatra, which have also entered the hotel aggregation segment.

Treebo Hotels recently raised $34 million (Rs 220 crore) in its Series C funding round led by Hong Kong-based investment firms Ward Ferry Management and Karst Peak Capital,

Treebo had raised Rs 112 crore in a Series B round led by Bertelsmann India Investments in July last year.

In July this year, FabHotels raised $25 million in a Series B round led by Goldman Sachs Investment Partners after securing $8 million in its Series A round from a group of investors last year.

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Oyo raises $250 mn in Series D round from SoftBank, Hero promoters & others

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