Oyo to raise $200 mn from new investor by December: Ritesh Agarwal

The CEO and founder of Oyo Hotels, Ritesh Agarwal

Softbank-backed hospitality firm Oyo is likely to raise the remaining $200 million out of the $1 billion funding announced last month, from a new investor by December, founder Ritesh Agarwal told Moneycontrol in an interaction.

The company is learnt to be in talks with giants such as WeWork and Didi Chuxing, among others, who could possibly put in their money in this round.

Interestingly, both WeWork and Chinese ride-hailing company Didi Chuxing also have Softbank as an investor, much like Oyo.

Last month Oyo announced a fund-raise of $800 million in a round led by existing investor Softbank and announced that they had received a commitment of another $200 million.

"There was a high level of interest from multiple potential investors and strategic investors (during the $800 million round). The rest $200 million would be from one of them. The transaction would be completed before the end of this year," Agarwal said declining to comment on the name of the investor.

Agarwal said that the company was evaluating offers from both strategic and equity investors.

While investors such as GreenOak Capital besides Softbank are equity investors, Oyo already has Nasdaq-listed Chinese hotel operator China Lodging Group as one of its strategic investors on board.

In May, Moneycontrol reported that Softbank had asked Oyo to get new investors, after which it would participate in a fresh funding round.

Also Read: SoftBank asks Oyo to get new investors for its fresh funding round

The rest of the $200 million that Oyo had on its balance sheet before announcing the $1 billion round will be invested in other global markets. The company recently expanded into the UK and Indonesia, among other global markets.

The company claims to be growing 3.2 times in terms of the total sales against 2.3 times during the last year.

"So with a higher base, we are growing faster," said Agarwal.

Launched in May 2013, by 23-year-old Ritesh Agarwal, Oyo used to aggregate select rooms across hotels and offer them on its website.

However, the company received a lot of flak on social media for poor customer service and poor quality of inventory in some parts of India.

The Gurugram-based company then shifted to a franchisee model, under which it offers customers rooms from exclusive properties that have either been leased by Oyo or are run on a revenue-share basis.

It runs multiple properties across categories including economy, mid-scale, and upper mid-scale properties. It recently entered into luxury resort range under the brand name Palette.

Besides hotels, the company has also entered into the rental space. Last month, it announced the launch of Oyo Living under which it will offer customer long-term housing rentals starting at Rs 7,999.