Tencent, one of the leading internet players of China is eyeing to lead a fresh funding round and back hotel chain OYO with $300-500 million.
According to the reports, this particular funding round will likely value the company at $2 billion which is almost double the valuation of $850 million from SoftBank’s Vision Fund.
“The company is engaged with Tencent, and a term sheet is likely There’s a bunch of other investors also in talks, but those are preliminary at the moment. The fundraise is largely to grow the China business,” a person familiar to the matter said.
Apart from Tencent, the Gurugram-based hotel chain has also talked with other Chinese companies and a few financial investors to participate in the funding round.
If the funding is confirmed, it will be the first-ever funding round of OYO that has not been led by SoftBank. OYO has recorded a gross booking value of $500-600 million.
OYO has been expanding rapidly in China. It was last month that the company announced the launch of its new hotels in 26 Chinese cities, making it the third overseas market for the company after Malaysia and Nepal. Apart from this, the company is also planning to expand even more and reach Indonesia, the UK and European markets.
“Getting a backer like Tencent will help OYO grow aggressively in China,” another source stated.
In China, OYO has onboard 2,000 people, running more than 11,000 hotel rooms in 26 cities including Hangzhou, Guangzhou, Chengdu and Shenzhen, among others.
Oyo operates in three segments, the aggregation business branded as Oyo Rooms, which contributes more than 90% to its revenues, Townhouse and Flagship, where the company leases properties and services them for a better quality experience. Oyo is also tying up with developers to build customized properties, which is why the company is not completely asset-light.
OYO is bolstering to give a tough fight to all the hotel chains and lead the league of the hospitality sector. The company is reaching heights of success and is soon to make more of it.