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India’s largest budget lodging startup Oyo Hotels and Homes said today it plans to raise about $1.5 billion as part of a new financing round as the startup looks to expand its footprints in the U.S. and Europe.
Ritesh Agarwal, SoftBank Group Corp. founder, Oyo Hotels and Homes said his company is raising $1.5 billion from investors because the India accommodating company startup wants to evolve to foreign markets as are the U.S. and Europe.
Agarwal said he will be spending more than $700 million to buy new shares in the company as part of a said before $2 billion plan in order to make his ownership stake worth more than three times. Also, other investors are SoftBank’s Vision Fund, Lightspeed Venture Partners and Sequoia India and they’ve all announced to contributing the rest of the current round.
Agarwal founded Oyo in 2013 and made it India’s second-most valuable startup worth around $10 billion. Its portfolio has more than 1.2 million rooms in more than 80 countries, including 590,000 rooms in China. The company America earlier this year and now has 7,500 rooms in 60 cities.
In his statement Agarwal wrote:
“We truly believe that we will be able to build a truly global brand out of India, while ensuring that the business is run efficiently and with a clear path to profitability.”
The beginnings of this company are quite interesting since Agarwal made his headlines in July with plans to spend $2 billion to raise stake in the company to 30% from about 10%. At this time, Japanese banks Mizuho Financial Group Inc. and Nomura Holdings Inc. were decided to be bankrolling Agarwal’s share acquisition. He is said to buy some of the shares from Sequoia and Lightspeed, and to carry out the transaction through an entity called RA Hospitality Holdings.
Bangalore-based director at RedSeer Consulting, Ujjwal Chaudhry said:
”Oyo’s valuation signals its scale and growth. The quality of the experience is not top-notch but it’s improving.”
It’s also worth mentioning that Agarwa’s “tripling down on the company” was made the same time WeWork’s internal commotion, and pretty much-discouraging IPOs were raising questions about startup prices whatsoever. The $10 billion valuation is making Oyo India one of the most valuable startups. Let’s just remind you that before that it was the company called One97 Communications, the parent of digital payments pioneer Paytm.
Also, let’s not forget the e-commerce firm Flipkart Online Services Pvt that was merged with Walmart Inc. in 2018 in a $16 billion deal. SoftBank’s investments lifted the valuations at all three: Oyo, Paytm and WeWork.
Oyo is the company that focuses on hotel owners helping to upgrade their interior – from bathroom fittings to furniture and bedding, and then provides them with some standardized supplies as are sheets and toiletries. They are also paying schools and training for their employees.
The company hires hundreds of people in the field who evaluate properties on some 200 factors, from the quality of mattresses and linens to water temperature. If you want to get listed, together with a bright red Oyo sign to hang street-side as a seal of housekeeping approval, you have to agree to a makeover that typically takes about a month. Oyo then takes a cut of around 25% of every booking. Rooms usually run between $25 and $85.