Post fundraising, OYO's estimated value is pegged at $5 billion

This e-series funding round also makes OYO the most valued hospitality company in the country, ahead of the Tata group’s Indian Hotels Company, which owns the Taj brand of hotels, and EIH, which owns the Oberoi brand of hotels.

Five-year-old Indian hospitality start-up OYO has raised $1 billion (Rs 7,263 crore) from four existing investors led by Japan’s SoftBank.

The latest fundraising is estimated to value OYO at $5 billion (Rs 36,300 crore), more than a five-fold increase since September 2017 when the last funding took place.

OYO, which operates in the budget hospitality space, was not even a unicorn - a term to describe a start-up valued at $1 billion and above - before the latest funding round.

This e-series funding round also makes OYO the most valued hospitality company in the country, ahead of the Tata group’s Indian Hotels Company, which owns the Taj brand of hotels, and EIH, which owns the Oberoi brand of hotels.

Indian Hotels and EIH have a market capitalisation of Rs 14,913 crore and Rs 8,739 crore, respectively.

Lemon Tree Hotels, which listed recently, has a market cap of Rs 5,700 crore.

OYO’s valuation is now more than the combined market cap (Rs 29,352 crore) of Indian Hotels, EIH, and Lemon Tree.

Also, OYO’s valuation is significantly higher than the $2.8 billion market cap of the Nasdaq-listed online travel company MakeMyTrip.

Besides SoftBank, which owns a majority stake in OYO, the three other existing investors, Lightspeed Venture Partners, Sequoia, and Greenoaks Capital, participated in the latest funding round.

OYO said it had already raised $800 million from the four investors and received commitment for an additional $200 million, bringing the total to $1 billion in this round.

J P Morgan is acting as the financial advisor to OYO in this exercise.

Before Tuesday's announcement, OYO’s cumulative funds raised in the previous rounds stood at $450 million.

Ritesh Agarwal, the 24-year old founder and chief executive officer of OYO, told Business Standard that it made sense for the company to raise this money from existing investors, including SoftBank, which had shown great faith in the business and always supported his growth plans.

OYO, which operates more than 10,000 hotels in over 350 cities across five countries, had about $150 million on its books before this funding round.

With this round, the total cash with the company is estimated to be $1.15 billion.

OYO started its journey in May 2013 with a single hotel in Gurgaon (a satellite town outside Delhi).

It now has 211,000 rooms under its management.

Of these, 120,000 rooms are in India, 87,000 in China, and the rest in the UK, Malaysia, and Nepal.

“We have an opportunity to grow bigger and become one of the top hospitality brands globally. This capital gives us the fire power to do that. We are just getting started,” Agarwal said.

He said the company was adding 40,000-45,000 rooms every month between China and India.

“We are the world’s fastest growing hospitality brand, expanding faster than IHG or Marriott,” he added.

The company will continue to explore newer businesses while remaining focused on both organic and inorganic growth.

Photograph: PTI Photo