Softbank, the Japanese conglomerate owned by Masayoshi Son, recently agreed to sell its stakes in Flipkart for $4 bn following an investment of $2.5 Bn in mid-2017 for its 20% stakes in the e-commerce company.
However, the company is very well focused and determined to bet on other companies that will remain profitable and growing. Therefore urging Indian hospitality service, OYO to get new investors on board, following which the Japanese giant will participate in a funding round reported to be worth $500-700 Mn.
A report from MoneyControl claimed that “many Chinese investors are interested in hospitality as a sector.” The report also stated that the valuation of OYO will be subject to appreciation from the new investors. However, a new funding round is most likely to mark the entry of OYO in the unicorn club.
The previous round of funding OYO received was a colossal $250 Mn Series D funding led by Softbank through its SoftBank Vision Fund for an estimated valuation of $850 Mn. That round of funding also witnessed the participation of existing investors Sequoia India, Lightspeed Venture Partners and Greenoaks Capital.
A few weeks later, the Gurugram-based company also struck a major strategic deal with Chinese hotel franchise, China Lodging Group Limited, for $10 Mn. Although the funding amount was not colossal, the deal enabled the hospitality service company to begin operations in China.
OYO is only a 5 year old company, founded in 2013 by Ritesh Agarwal, but has expanded and grew exponentially in a short period of time. It now operates over 70,000 rooms across 230 cities in India, Malaysia, Nepal and most recently China. It is now targeting opening business in Middle-East as well next week.
According to filings released by the company, the company recorded a decrease in losses in FY 2016-17 to $54 Mn and revenues worth $19.2 Mn. By the end of 2017, the company changed its business model from hotel aggregation into franchise. It now runs a pure-play franchise business, meaning that hotel partners can now run their hotels under the company’s brand.
OYO is on a very good momentum in 2018 as it is growing and expanding its business and brand in international markets, while also maintaining its grip in the Indian market as well. As the company looks set to reach unicorn status, everything seems like the company is set and geared to achieve extraordinarily well in the coming years.