OYO Rooms, currently the sixth-largest hotel chain in the world, is in talks with existing and new investors to raise another $1 billion. But what is more important here, is that it is scouting to double its valuation for the round to $10 billion.
When the Ritesh Agarwal led company raised $800 million from SoftBank in September last year, along with the $100 million pickups from Grab and Didi Chuxing, OYO’s valuation was $5 billion. With the round, SoftBank had taken up its take to 46%, reports ET.
Now, OYO is looking to raise another $1 billion, and for this, it is talking to new investors that can take a lead in the round and strategic and financial investors are lining up for the same.
Due to its lofty goal of becoming the largest hotel chain in the world, and by showcasing exponential growth in moving towards that goal, investors are ready to back the company happily.
This very rise of OYO to the sixth top hotel chain on a global scale, and becoming the second largest hotel chain in China 4.5 lakh rooms cross 10,000 facilities in merely 1.5 years is how OYO has arrived at the pitch of 2X growth in valuation to $10 billion.
The last round it had raised, $1 billion from SoftBank, directly or indirectly, and $75 million from Airbnb, was also to carry on this very expansion at an aggressive pace. OYO has already started on its operations in a significant number of countries and the major revenues are coming from these countries too.
But to become the top player in the world, just starting operations will not be enough. OYO needs money for strengthening the operations there. Case in point, to strengthen position in Europe, OYO has announced a 100% stake acquisition of @Leisure Group in Amsterdam for a whopping sum of $415 million. That is along with the planned growth of OYO Townhouse in UK.
So the fundraise talks at the said targeted valuation make sense right now. What is also important here is that if the round takes place at $10 billion valuation, OYO will share the seat of the highest valued Indian startup, along with Paytm. If Paytm also raises the fresh round it is planning on at the expected $17-18 billion valuation, OYO will take the second spot then.