OYO Secures $50 Million Funding from InCred to Boost Growth

OYO has successfully raised Rs 416.85 crore (approximately $50 million) from InCred Wealth and Investment. This funding comes after nearly three years for the Gurugram-based hospitality unicorn.

Special Resolution for Funding

The board at OYO passed a special resolution to issue 14,37,41,379 Series G CCPS at an issue price of Rs 29 each, raising a total of Rs 416.85 crore or $50 million. This information was obtained from the regulatory filing accessed from the Registrar of Companies (RoC).

Utilization of Funds

OYO plans to utilize these proceeds for growth, global expansion (including acquisitions), and enhanced business plans. This strategic funding is expected to bolster the company's efforts in scaling its operations and expanding its market presence.

Valuation and Stake

According to TheKredible estimates, OYO's post-allotment valuation stands at around Rs 19,756 crore or $2.38 billion. Importantly, the new investor, InCred, will hold a 2.11% stake in the company following the allotment.

Previous Funding and Valuation Changes

In August 2021, US-based tech giant Microsoft invested $5 million in OYO at a valuation of $9.6 billion. The latest capital injection from InCred comes at a valuation that reflects a significant haircut of more than 70% from its peak valuation.

Financial Performance

OYO's founder Ritesh Aggarwal recently announced that the company posted its maiden annual net profit of Rs 100 crore in FY24. Although the company did not disclose its revenue for the last fiscal year, its revenue from operations grew by 14.3% in FY23, reaching Rs 5,464 crore from Rs 4,871 crore in FY22.

During the same period, the company reduced its losses by 33.7%, bringing them down to Rs 1,287 crore.

IPO and Valuation Adjustments

Recently, OYO withdrew its draft papers (DRHP) for the second time due to unfavorable market conditions. The firm may refile the IPO papers after the current funding round concludes, during which OYO is likely to raise additional capital.

In 2022, OYO's major investor, SoftBank, first reduced its valuation to $3.4 billion. However, OYO rejected the markdown at that time.

Conclusion

The Rs 416.85 crore ($50 million) funding from InCred Wealth and Investment marks a significant milestone for OYO as it seeks to expand and strengthen its global operations. The strategic use of these funds is expected to drive growth and enhance the company’s business plans. Despite the significant valuation cut from its peak, OYO remains focused on its financial performance and future growth prospects.