India-based hospitality company OYO Hotels & Homes will
use its latest funding round - a $1.5 billion Series F - to expand its vacation
rentals business in Europe and to grow its overall presence in the United
States, where it says it currently has 100 hotels in 21 states.
The new round will include $700 million as primary capital from OYO
founder and CEO Ritesh Agarwal through his entity RA Hospitality Holdings and
$800 million from existing investors including SoftBank, according to a person
familiar with the matter.
Officially, OYO says "Agarwal is being supported by global institutionalized banks and his financial partners."
With this investment, Agarwal’s stake
in the company he founded in 2013 will be nearly 30% and the company will be valued at
$10 billion, the source says.
The Series F round is part of a plan Agarwal announced in July
for his holding company to sign a $2 billion primary and secondary management investment
round with OYO Hotels & Homes. That plan received approval from the Competition
Commission of India (CCI) last month.
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As part of that announcement, OYO said investors Lightspeed
Venture Partners and Sequoia India would sell part of their holdings to help
Agarwal increase his stake in the company.
“The continued support of our investors like SoftBank Vision
Fund, Lightspeed, Sequoia Capital is a testament to the love, trust and
relentless support of our asset owners and customers, hard work of all
OYOpreneurs and our commitment to making #LivingTheGoodLife a reality for over
3.2 billion middle-income people around the world,” Agarwal says.
“With the CCI approval now in place, the company will get a
capital infusion of approximately $1.5 billion to support this mission,
supported by me and other shareholders.”
OYO says its brands are now located in more than 800 cities
in 80 countries in India, China, Malaysia, the Middle East, Indonesia, the
Philippines, Japan, Europe, the United Kingdom and the United States – which it
says is its fastest-growing market. The company says it has 1.2 million rooms
under management in hotels and homes, and its revenue in August 2019 was nearly
four times that of August 2018.
“I am also happy to share that on a year-over-year basis, we
have seen that not only are we operating profitably at the building level but
at the same time our EBITDA has also improved by 50% (on a year-over-year
basis). The losses as a percentage of net realizable value have also been on a
steady and significant declining curve,” Agarwal says.
“The growth across verticals in India and globally has been
phenomenal, and 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.
"Our immediate goal however is to make forward-looking
investments so we can achieve our mission, while delivering on our fiduciary
responsibility to our investors by building a sustainable business.”
Hear more from OYO at The Phocuswright Conference
Ritesh Agarwal will take Center State at the event in Florida in November.
* Check out this interview with Agawal from The Phocuswright Conference 2018.
Spotlight Interview: Billion Dollar Baby - OYO