Published on : Thursday, August 16, 2018
Indian hotel chain Oyo is in advanced talks to raise up to $1 billion in a deal that could usher the company into India’s crowding Unicorn club with a valuation of over $4 billion, said three people familiar with the development.
The Gurgaon-based startup, which has been aggressively expanding in China, is in talks with two consortiums — a combination of SoftBank Vision Fund and co-working giant We-Work, and a set of US-based strategic investors in the travel space, two of them said.
A pre-money valuation above $4 billion would vault Oyo, founded by Ritesh Agarwal five years ago, to the league of mostvalued Indian internet companies behind Flipkart ($20 billion) and Paytm ($10 billion).
Ola, India’s largest taxi-hailing service, is estimated to be worth about $4 billion. Oyo is yet to finalise the investor consortium and the capital it will raise, which, according to sources, may be between $500 million and $1 billion. Depending on this, the company could be valued at between $4.5 billion and $5 billion, they said. Oyo was previously valued at about $850 million when it raised about $260 million from SoftBank and other investors in September last year.
Oyo had mandated merchant bank JP Morgan to scout for new investors. A number of global private equity firms, including General Atlantic and Warburg Pincus, and strategic investors including Tencent had expressed interest. However, talks with them did not progress. Oyo and SoftBank did not reply to emailed queries.
Oyo is raising capital also for setting up a joint venture for its recently launched operations in China, a market notoriously difficult for international companies to crack.