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Oyo China

SoftBank Vision Fund, Hero Enterprise put in Rs 1600 crore in OYO

Oyo China

Budget hotel aggregator OYO has raised around Rs 1600 crore ($250 mn) from its existing investor SoftBank and Hero Enterprise. However, the company’s did not disclose exact terms of the latest round.

Gurugram-headquartered firm closed the investment at an estimated valuation of Rs 5445 – Rs 5766 crore ($850 million-$900 million). According to the company, the proceeds will be used to strengthen its network in India. With this round it also plans to expand in South East Asia (SEA) region.

This is second largest bet by SoftBank Vision Fund in India in a span of two months. First being their $2.5 billion investment in Flipkart in August, India’s largest online commerce company.

Earlier, world’s largest technology-focused investor had put in $120 million in the company, across two rounds, in 2015 and 2016. For Hero Enterprise, this seems like a first investment in the consumer-Internet space.

Justin Wilson, SoftBank’s board representative in Oyo, in a statement said, “OYO has solidified its position in India as the leading accommodation brand for consumer affordability and high quality standards. We’re excited to continue to support OYO as they further expand their position in India and bring the OYO promise of affordability and elevated hospitality to other markets around the world.”

The latest investment has also witnessed participation from OYO’s existing group of backers, a list that includes Lightspeed Venture Partners, Sequoia Capital and Greenoaks Capital.

Presently, OYO, claims to operate 8,500 hotels and 70,000 rooms in more than 230 cities in India. Launched in 2013 by Ritesh Agarwal, OYO so far has secured about $442 mn.

Meanwhile, the company’s losses widen to a whopping 25 times in 2016 as compared to previous year. It posted loss of Rs 496 crore in the year 2016 while its expenses rocketed to Rs 520 crore in that period from about Rs 32 crore in the year 2015, according to business research platform Tofler. Oyo posted revenue of Rs 32 crore in 2016, 16 times up from Rs 2 crore in 2015.

Amidst discount war, hotel aggregator competes with well-funded MakeMyTrip, Treebo, Fab Hotels and Yatra. Last week, Treebo Hotels secured $34 million Series C funding round led by Hong Kong-based investment firm Ward Ferry Management and Karst Peak Capital.

According to experts in the industry, India’s still-nascent but fast-growing budget hotel segment has seen rise in capital raising activity by all the major players operating in the space.

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