OYO Seeks INR 1,000 Cr Funding from Family Offices

Hospitality major OYO is reportedly in advanced discussions to raise fresh funding of around INR 1,000 Cr, weeks after withdrawing its IPO application.

According to sources cited by ET, the hotel chain is expected to acquire a share from the family offices of prominent Indian business leaders, including stock market guru Anand Jain, Mankind Pharma's entrepreneurs Ramesh and Rajeev Juneja, and others.

Potential Investors and OYO's Response

For comments on the development, sources have contacted OYO. In light of the replies, the narrative will be modified. This potential investment comes after OYO officially withdrew its IPO documents from the market regulator SEBI last month.

Recent Financial Moves and IPO Withdrawal

OYO had announced its intention to raise $450 million through the issuance of dollar bonds, with JP Morgan leading the transaction. This announcement coincided with the withdrawal of the IPO filings.

This move marks a significant shift in the company's funding strategy, focusing more on private investments and debt financing rather than going public.

OYO's Global Presence and Offerings

OYO is a hospitality service startup that was founded in 2012 by Ritesh Agarwal with the goal of offering travelers from all over the world simple, inexpensive lodging options.

The company claims to offer over 40 integrated products and solutions to patrons who operate above 157,000 hotel and home storefronts in more than 35 countries, including India, Europe, and Southeast Asia. This extensive network underscores OYO's ambition to be a global leader in the hospitality industry.

Extraordinary General Meeting and Funding Plans

OYO is heading towards hosting an extraordinary general meeting (EGM) on June 18 (Tuesday) to approve the fundraise. At this meeting, the company will consider raising around INR 500 Cr. This EGM is a crucial step in securing the necessary approvals for the planned fundraising activities.

Recent Fundraising Efforts and Valuation Adjustments

In May, the travel tech unicorn was in talks to raise a fresh funding round at a marked-down valuation. According to reports, the business hired Incred to facilitate discussions with family offices in order to fund between $80 and $90 million at a valuation of $2.3 billion.

This valuation is significantly lower than the $10 Bn valuation at which OYO raised its last external round, reflecting current market conditions and investor sentiment.

Financial Performance and Profitability

According to founder and CEO Ritesh Agarwal, OYO had a net profit of over INR 100 Cr in the fiscal year 2023–24 (FY24), marking the company's first full year of profitability. Taking to social media platform X, Agarwal highlighted that OYO logged its eighth straight quarter of positive EBITDA in Q4 FY24.

He said that at year's end, the firm funded by SoftBank had financial reserves of about INR 1,000 Cr. This achievement marks a significant milestone for the company, indicating its successful turnaround efforts and operational efficiency.

Conclusion

The planned fundraising and recent profitability highlight OYO's ongoing efforts to strengthen its financial position and expand its global footprint.

The upcoming EGM and potential new investments from prominent family offices signify a crucial phase in OYO's growth trajectory. As the company navigates these developments, its ability to secure funding and maintain profitability will be key to its future success.