OYO raises $1 billion to fund overseas expansion
New Delhi: Hospitality firm OYO Tuesday announced raising USD 1 billion (around Rs 7,280 crore) in a fresh round of funding led by Japan's SoftBank group for further expansion in India, China and other countries.
The company has already raised USD 800 million and has further commitment of USD 200 million, OYO said in a statement.
The latest funding round led by SoftBank Investment Advisers (SBIA) through SoftBank Vision Fund also saw participation from other existing investors Lightspeed Venture Partners, Sequoia and Greenoaks Capital, it added.
Post the latest funding round, OYO Group will be valued at USD 5 billion, a highly placed source said on condition of anonymity.
Commenting on the development, OYO founder and chief executive Ritesh Agarwal said: "In the last 12 months, we have increased our footprint to five countries -- India, China, Malaysia, Nepal, and more recently in the UK. With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent."
The company will also deploy fresh capital to take global its unique model that enables small hotel owners to create quality living spaces, he added.
In a short span of time, OYO Hotels has grown to become the most-preferred hotel brand in both economy and mid-market segments, Agarwal said.
"We have already started expanding our presence to newer segments, with OYO Home, OYO Townhouse and more recently Palette Resorts by OYO. We will continue to explore newer businesses while remaining focused on both organic and inorganic growth," he added. The company will direct a significant part of the funds from this round of financing, approximately USD 600 million, into strengthening its position in China, while the rest will go into maintaining its leadership position in India and expansion into new markets, OYO said.
The company currently has over 1,25,000 rooms in India and is witnessing close to three-times growth in transactions year-on-year with net take rates over 20 per cent, it added.
"With a promise to deliver good quality accommodation at affordable prices, OYO has grown exponentially to become the largest hotel chain in South Asia, and is swiftly expanding to international markets. We are tremendously excited to be a part of OYO's successful journey," SoftBank Investment Advisers (SBIA) Partner Munish Varma said.
In a similar vein, Lightspeed India Partners Advisors MD Bejul Somaia said: "It's exciting to see OYO's success in scaling the India business while extending their pioneering asset light, controlled-experience model to international markets."
Launched in May 2013, OYO currently has presence in over 350 cities with over 10,000 asset partners spread across five countries including India, China, Malaysia, Nepal and the UK.