Oyo Eyes Rs 413 Crore Through Proposed Rights Issue
Oyo Rooms is raising a fresh round of funding worth Rs 413 crore through a proposed right issue of shares to existing shareholders, according to documents filed with the Registrar of Companies. The new round of funding will peg the post-money valuation of the Gurugram based startup at Rs 3129 crore or about $460 million, the filing reflects.
OYO, founded by 21-year-old Ritesh Agarwal , had raised its previous round of funding of $100 million in August 2015 led by Japanese telecom and internet major Softbank Corp . The company was then valued at $400 million, and the new round of the company reflects sobering sentiment around high valuation of companies.
ET was first to report in March 8 edition about Oyo’s struggles to get a new investor to lead its new round of funding and it is likely to be raised from existing backers. Besides SoftBank, OYO’s other investors include LIghtspeed Venture Partners, Sequoia Capital, Greenoaks Capital and DSG Consumer Partners.
When contacted by ET over a call, Agarwal declined to comment.
Along with a new round of funding, Oyo is also looking to buyback shares worth Rs 60 crore from certain investors while not disclosing the selling shareholder. ET had reported in its April 13 edition that VentureNursery, a Mumbai-based accelerator which was the first investor in Oyo, is looking for an exit.
The capital infusion is expected to be used by Oyo to expand its new initiative called “Flagship”, where it controls 100% of the inventory of the hotel under this category to provide a more premium experience to customers.
Sources say the company is planning to focus more on the its new flagship category going forward. The company entered the flagship category a few months ago. It is also working with state governments for categories like home stays and bed and breakfast.
In May, Oyo told PTI that it has a network of 5,855 partner hotels in 170 cities of India with a total room capacity of 68,300 and plans to triple its inventory by December. In an interview to ET last week, COO Abhinav Sinha had said the company is on track to meet its target of tripling its inventory by December 2016.
Oyo competes with players like Treebo, which is also closing a new round of funding, besides other startups like Fabhotels.
Last week, Fabhotels raised $8 million in a series A round from Accel Partners and RB Investments.
The space has also seen interest from online travel portals MakeMyTrip and Goibibo, both of which have raised new rounds of funding this year and plan to invest in the white-label hotel business.