Exclusive: FabHotels set to raise Rs 40 Cr at a valuation of Rs 856 Cr

Budget hotel chain FabHotels is set to raise about Rs 39 crore from its existing investors at a valuation of around Rs 856.4 crore. The company has issued 1,28,034 Series B2 CCPS for its Series B2 funding round, according to its regulatory filings. Goldman Sachs, Accel India and RB Investments are in the last leg to pump in the amount, reveal the filings. 

This comes just a day after its competitor Treebo raised around Rs 3 crore from BCCL. 

Both FabHotels and Treebo have been chasing sustainable growth over the last few years as their core competitor — OYO has accumulated a full war-chest through hits biggest backer SoftBank. 

This round will be a fresh tranche of funds for FabHotels after it raised about Rs 54 crore in June 2019. At the time, the company was valued at about Rs 651 crore.

As for the current round, according to filings with the Ministry of Corporate Affairs, Accel has invested about Rs 14.2 crore. The company has allotted 46,558 Series B2 compulsorily convertible preference shares (CCPS) to Accel India IV at Rs 3,053 per share.

Further, the filings reveal that Goldman Sachs will match Accel’s investment and pour in Rs 14.21 crore into FabHotels while RB Investments will infuse Rs 10.66 crore. It is also worth noting that the Singapore-based boutique investment fund is backing the company after skipping its Series B and B1 rounds.

Following this round, Goldman Sachs will be the biggest shareholder with a 25.64% stake. At the same time, Accel will remain the second-biggest shareholder in the company with a 24.68% equity in the company followed by chief executive Vaibhav Aggarwal who holds 18.72% of the company. 

Unlike during 2015-16, both FabHotels and Treebo have not been burning money on discounts and adding more properties. This is evident from the financial performance of Treebo during FY19. The SAIF Partners-backed firm recorded almost 64% spike in operating revenue to Rs 67.8 crore in the year ending March 2019 while its losses saw only a marginal increment of 2.86% to Rs 118.3 crore.

This is in contrast to their largest competitor OYO, which has been expanding across the world at breakneck speed.