Deutsche Bank said to refinance part of $350 million Oyo loan

The refinancing eases one of founder Ritesh Agarwal’s key pressure points, allowing him to turn his attention to the company’s capital markets listing

Deutsche Bank AG has refinanced part of a $350 million loan originally extended by Mizuho Bank Ltd. to fund Oyo Hotels founder Ritesh Agarwal’s purchase of shares in the company, according to people familiar with the matter.

The German lender is providing a three-year bullet loan of about $150 million, the people said, asking not to be identified as the details are private. The remaining portion of the Mizuho facility has been repaid by Agarwal’s investment entity RA Hospitality Holdings, they said.

Agarwal, still in his early 30s, has enjoyed the backing of SoftBank Group Corp. founder Masayoshi Son for about a decade, via the SoftBank Vision Fund and additional support to get his India-headquartered venture off the ground. What once looked like a promising new tech platform ran into trouble over the years, and efforts toward an initial public offering were delayed early this year as SoftBank pressed the company to hold off until its earnings were stronger.

The refinancing eases one of Agarwal’s key pressure points, allowing him to turn his attention to the company’s capital markets listing. It helps streamline a complex funding structure put in place when Agarwal increased his stake in Oyo’s parent — Oravel Stays Ltd., which in September was renamed to Prism — from 10% to 32% in 2019. Agarwal owns the entirety of RA Hospitality, the vehicle used for the investment, and controls all voting rights tied to his holdings.

Prism is working with Axis Bank Ltd., ICICI Securities Ltd., and the Indian units of Goldman Sachs Group Inc. and Citigroup Inc. to prepare for an IPO, expected next year. The offering is likely to include a mix of new and existing shares and could value the company between $7 billion and $8 billion.

Deutsche Bank and a representative for Agarwal declined to comment. Mizuho didn’t respond to requests for comment.

The Oyo group has reported 14 consecutive quarters of positive adjusted earnings before interest, taxes, depreciation and amortization, and is expanding its use of artificial intelligence to automate pricing and property management, a spokesperson said earlier.

Agarwal founded Oyo in 2012 and was mentored by Son. Over the past decade he has led the business through a significant restructuring, retreating from certain markets and cutting costs. Prism now serves more than 100 million customers in 35 countries, with brands including Oyo Hotels, Motel 6, Townhouse, Sunday and Palette.