Ahead of mega deal, SoftBank asks Oyo to get backed by others first

It sounds unusual that SoftBank is asking its portfolio company to onboard two new investors for getting more capital from it. The Masayoshi Son-led investment conglomerate is rather known for making bold bets by looking into eyes of entrepreneurs.

On contrary to popular belief, SoftBank has set a condition for Oyo to raise a fresh round from two new investors if it wants multi-million capital infusion from it, reports Moneycontrol.

The unusual condition comes at a time when Oyo has been engaged to raise new round up to $700 million for over two months. Importantly, the company is also slated to become 12th Unicron if the new funding comes in.

In an e-mail reply to Entraclr, Oyo, however, said "We deny the rumours of SoftBank asking OYO to get any investor. We are growing in India and our focus on providing beautiful living space will continue.”

During the last funding round of $250 million led by SoftBank Vision Fund, the valuation of Oyo was around $850 million. The report further added that many Chinese investors are interested in hospitality as sector and may join the biggest deal ever for the hotel brand.

To ramp up its overseas expansion, Oyo had recently kicked-off operations in Dubai as well as in China. Last week Entrackr had exclusively reported the Oyo operations in China.

Since backing from SoftBank in September last year, the journey for Oyo has been pivotal. Within a week it got another funding of $10 million from China Lodging Group.

Three months later the company adopts pure pay franchise model from its earlier budget hotel aggregation avatar. It also made comeback on OTAs platforms such as MakeMyTrip and Goibibo after two years of delisting.

Also Read: Exclusive: SoftBank-backed Oyo is launching in Dubai soon!

Meanwhile, MakeMyTrip is also eyeing a strategic stake in Oyo.

Currently, Oyo claims to operate 8,500 hotels and 75,000 rooms in more than 230 cities in India. Besides China and Dubai, it is also exploring international markets such as Indonesia.

The full stack hospitality company had also pegged down losses by 27 per cent to Rs 363.7 crore in 2016-17 as compared to a previous financial year. Moreover, it witnessed seven times revenue growth at Rs 125 crore in FY17 compared to Rs 17 crore during 2015-16.

As of now, the company had raked in about $442 million risk capital from likes of Softbank, Sequoia Capital, Lightspeed Venture and Hero Enterprise amongst others.