According to people familiar with the company's plans to recover from the pandemic's second wave, Oyo Hotels & Homes has closed a $660 million debt financing round from global institutional investors to service existing loans.

According to sources, Wall Street investors such as Fidelity, Citadel Capital Management, and Varde Partners have subscribed to Oyo's term loan B (TLB).
Oyo did not reveal the names of the investors who took part, but said its TLB was "oversubscribed" nearly 1.7 times over, with a total commitment of nearly $1 billion.

Because of the high level of interest from these institutional investors, Oyo increased the offering size by 10% to $660 million, up from $600 million initially. According to the company, this resulted in the total financing being raised at an interest rate of 825 basis points, compared to the initial price guidance of 850 basis points.

According to the terms of the agreement, Oyo is required to repay the principal loan amount after six years, while also paying interest at regular intervals.

According to Abhishek Gupta, Oyo's group chief financial officer, the funds will be used to retire the company's past debts, strengthen the balance sheet, and for other business purposes, such as product technology investment.
“This will enable Oyo to widen its shareholder base and get significant third-party validation in terms of where the business quality is,” said a person aware of the plans. International ratings agencies Moody’s and Fitch have rated Oyo as stable.

Oyo had also obtained debt from the now-defunct UK lender Greensil, which was backed by SoftBank, which was also an investor in Oyo. According to sources, that loan is also being repaid right now.

At a recent event, founder Ritesh Agarwal stated that Oyo still has around $800 million in cash and that its monthly burn across businesses is in the range of $4-5 million. Currently, India and Southeast Asia account for 43 percent of its revenue, with Europe accounting for 28 percent and the rest coming from other global markets.

The latest round comes at a time when the hospitality sector in India is still reeling from the effects of Covid-19, despite the fact that bookings are gradually increasing as lockdown restrictions are lifted. A potential third wave of the pandemic could disrupt the sector once more, leaving market conditions uncertain.