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OYO raises money from Didi Chuxing to close $1 bn funding round
Photo Credit: VCCircle

Budget hospitality chain OYO has raised $100 million (Rs 709.4 crore at current exchange rate) from Chinese ride-hailing firm Didi Chuxing to close its ongoing $1 billion investment round, shows filings with the Registrar of Companies. As part of the $1 billion investment round, $900 million has already been invested by Japanese conglomerate SoftBank, Singapore ride-hailing company Grab and others.

Under the $1 billion round, OYO had raised $800 million in September last year from SoftBank and other investment firms including Lightspeed Venture Partners, Sequoia Capital and Greenoaks Capital. The round valued the Ritesh Agarwal-led firm at $5 billion. In December 2018, the Gurugram-based startup raised $100 million from Grab to take the overall amount of the round to $900 million.

Run by Oravel Stays Pvt. Ltd, OYO has been on an expansion spree and is currently present in 500 cities across eight countries: India, China, Malaysia, Nepal, UK, UAE, Indonesia and the Philippines. It currently operates over 13,000 franchised or leased hotels and over 6,000 homes as part of its chain. In India, OYO is present in over 180 cities with more than 8,700 properties.

Agarwal, founder and group CEO at OYO, had told TechCircle that a significant part of the $1 billion will go towards its China business. 

The Economic Times, which first reported the latest fundraising, said the company will infuse the capital raised from Beijing-headquartered Didi into its China business OYO Jiudian. A fair portion of the fresh capital will also be pumped into OYO’s India operations. The report further said OYO’s Chinese entity will have a shareholding pattern like that of India, where SoftBank, the largest shareholder, holds around 42% stake. Of the $1 billion raised, OYO has committed $600 million for China operations while the rest is reserved for hiring and other overseas markets, the publication said.

OYO had recently strengthened its top deck by making a slew of international appointments with an aim to expand across different regions.

The company appointed Andrew Verbitsky as the head of its Europe operations, Sam Shih as its chief operating officer for China, Jeremy Sanders as the UK head and Tan Ming Luk as the head for Malaysia. Verbitsky has had stints at Airbnb and Delivery Hero across Europe and Asia. He helps OYO in its international expansion plans. Sanders is responsible for establishing the hotel chain in the UK. Luk, who was the Malaysia head of Chinese dockless bike-sharing platform Ofo, leads strategy development for Ola in the region. In China, OYO had recently appointed Wilson Li as chief finance officer, Jia Zhou as chief technology officer and Tony Liang as chief human resource officer.

Earlier, the company had appointed Aditya Ghosh, former president of budget carrier IndiGo, as chief executive officer to head its operations in India and South Asia.

OYO recently reported a three-fold rise in operating revenues amidst stagnant losses even as gross expenses rose nearly two-fold for the year through 31 March 2018.

The company reported operating revenues of Rs 415.8 crore for 2017-18, up from Rs 120.4 crore the previous year.

The company recognises operating revenues from commissions and service fees for hotel bookings. 

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