New funding could pitchfork Oyo to a `unicorn’ with a valuation of more than USD 1 billion
Japan's SoftBank is learnt to have asked its portfolio firm Oyo to get new investors, after which it will participate in a fresh funding round, which could be as high as USD 500-700 million, according to a source privy to the development.
There was no immediate clarity on the valuation being quoted for this round. However, it is likely that it will fetch the five year old company a unicorn status.
Oyo last raised around USD 250 million in a round led by SoftBank Vision Fund which was immediately followed by another USD 10 million raised from Nasdaq-listed Chinese hotel operator China Lodging Group in September.
While the company did not disclose the valuation then, according to sources it was around USD 850 million.
"Many Chinese investors are interested in hospitality as a sector," said the source quoted above declining to name the investors who have been approached.
"Valuation will depend on what sort of appetite they get from the new investors," the person added.
The report of Oyo in talks to raise another round was first reported by Mint.
Oyo which started off in 2013 as an aggregator of budget hotel rooms now claims to be getting most of its revenue from exclusive properties that have either been leased by Oyo or are run on the revenue share arrangements.
The company which recently also expanded its business to China, claims to be having 75,000 rooms listed on its platform.
In an email response, Oyo said that it was well capitalised with USD 250 million in the balance sheet. SoftBank declined to comment.
The last few years were tough for Oyo which had been struggling with bad consumer reviews and the online travel agencies (OTAs) standing against it.
Companies such as MakeMyTrip and Yatra had delisted the firm in 2015 citing conflict of interest.
In 2016, Oyo also had to raise an internal round of USD 62 million from SoftBank. None of its other existing investors such as Greenoaks Capital, Sequoia Capital and Lightspeed Venture Partners participated in the round.Much of that has however settled by now. Given Oyo's decision to change its business model, companies such as MakeMyTrip also listed it back on its platform.