Microsoft eyes to close $9 billion funding round in OYO
Microsoft is in talks to invest in online hotel chain Oyo at a $9 billion valuation before the company goes public. The deal between Microsoft and Oyo could be announced in the coming weeks and is expected to be a precursor to the hotel chain's initial public offering (IPO).
If the deal goes through, Oyo may also use Microsoft's cloud services. According to Reuters, Oyo founder and CEO Ritesh Agarwal stated that the Gurgaon-based company is considering a public offering, but he did not provide a timeline.
SoftBank-backed Oyo is India's largest hotel chain and the world's sixth largest. Ritesh Agarwal founded it in 2013 to aggregate bookings for low-cost hotels all over the world. With 18,000 properties in India, Oyo is present in over 415 Indian cities. It has over one million rooms worldwide and over 23,000 exclusive hotels in 800 cities.
The COVID-19 pandemic wreaked havoc on the hotel chain's business, resulting in massive layoffs, cost cuts, and losses. Oyo Hotels & Homes secured $660 million in debt financing from global institutional investors earlier this month to service its existing loans. In addition to servicing its existing loans, the online hotel aggregator intends to recover losses caused by the COVID-19 second wave.
According to sources close to the situation, Oyo is likely to use the funding to expand its technology play and gain more market share at a time when the hospitality industry is trying to claw its way out of the Covid sinkhole that has drowned several competitors, potentially lowering competitive intensity and triggering consolidation.
This development also comes at a time when Microsoft has expressed interest in making strategic investments in emerging market technology disruptors such as India.
Following the TLB funding, Oyo's group chief financial officer, Abhishek Gupta, told ET earlier this month that the funds would be used to retire previous debts, strengthen the balance sheet, and increase product technology investments.
Prior to the TLB funding, Oyo became the first Indian startup to be rated by international rating agencies Moody's and Fitch. It had also previously stated that its India business had become EBITDA positive just prior to the onset of the second wave.
If the deal goes through, Oyo may also use Microsoft's cloud services. According to Reuters, Oyo founder and CEO Ritesh Agarwal stated that the Gurgaon-based company is considering a public offering, but he did not provide a timeline.
SoftBank-backed Oyo is India's largest hotel chain and the world's sixth largest. Ritesh Agarwal founded it in 2013 to aggregate bookings for low-cost hotels all over the world. With 18,000 properties in India, Oyo is present in over 415 Indian cities. It has over one million rooms worldwide and over 23,000 exclusive hotels in 800 cities.
The COVID-19 pandemic wreaked havoc on the hotel chain's business, resulting in massive layoffs, cost cuts, and losses. Oyo Hotels & Homes secured $660 million in debt financing from global institutional investors earlier this month to service its existing loans. In addition to servicing its existing loans, the online hotel aggregator intends to recover losses caused by the COVID-19 second wave.
According to sources close to the situation, Oyo is likely to use the funding to expand its technology play and gain more market share at a time when the hospitality industry is trying to claw its way out of the Covid sinkhole that has drowned several competitors, potentially lowering competitive intensity and triggering consolidation.
This development also comes at a time when Microsoft has expressed interest in making strategic investments in emerging market technology disruptors such as India.
Following the TLB funding, Oyo's group chief financial officer, Abhishek Gupta, told ET earlier this month that the funds would be used to retire previous debts, strengthen the balance sheet, and increase product technology investments.
Prior to the TLB funding, Oyo became the first Indian startup to be rated by international rating agencies Moody's and Fitch. It had also previously stated that its India business had become EBITDA positive just prior to the onset of the second wave.
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