OYO is all set to become the next unicorn as Chinese Internet company Tencent is planning to invest between $300 and $500 million at a valuation of over $2 billion.
The company is currently engaged with Tencent, and a term sheet is likely to come in. Besides, it is in talks with other investors, but those are preliminary at the moment.
Importantly, Tencent and SoftBank would invest second time together in India. They invested in ride-hailing firm Ola together. So far, Alibaba has been the preferred partner for Masayoshi Son-led funds. The duo invested in four companies including Paytm, Paytm Mall, Snapdeal.
The development comes a few months after SoftBank reportedly asked OYO to look for a new investor for the fresh round to make its existing marquee investor the SoftBank Group of Japan to chip in with its own share of capital.
The company raised $250 million, mostly from SoftBank Vision Fund last September. In April this year, OYO raised $10 million through a Chinese hospitality company China Holding Group. It was valued at $850 million during the last funding round.
Amidst this, the hotel brand, which recently launched the operation in China and is running 11,00 hotel rooms in 26 cities, plans to utilise the new funds into the expansion in the Chinese market.
Last December, OYO pivoted from aggregation to a pure-play franchise model which allows hotel partners to become Oyo branded hotel. The hotels that were part of the aggregation model converted into franchises.
The move was aimed to deliver uniform experience and pricing. Since then, the platform has also launched back to back operations in various cities outside the country.
Recently, the company began operations in London. Entrackr has exclusively reported Oyo’s operations in UK, Dubai, and China. Previously, it also forayed into Malaysia and Nepal.
Experts say that with the expansion on the line, the hotel brand eyes sizeable opportunity in budget-hotel segment. The budget-hotel segment is still untouched in the International market which gives direct benefit to the likes of OYO
Launched in 2013 by Ritesh Agarwal, Oyo has so far secured about $442 million from the likes of SoftBank, Lightspeed, Hero Moto Corp and others.
The development was first reported by Times of India.