Indian hotel aggregator Oyo has raised $1 billion from Japan’s SoftBank Vision Fund, Sequoia Capital and Lightspeed Venture Partners, making it India’s latest startup to join the unicorn club.
The latest e-series funding round values the Gurugram-based startup at $5 billion, which is five times more than $900 million at which it raised money in the last round last year. Existing investors have put in $800 million with commitments for additional $200 million later, according to media reports.
With this new funding round, the five-year old budget hotel operator becomes the most valuable hospitality company in India, ahead of the Tata Group-owned Indian Hotels Company and EIH. While Indian Hotels runs Taj hotels in India and abroad, EIH operates Oberoi Hotels, both luxury hotels brands.
SoftBank owns a majority stake in Oyo. The company said that JP Morgan is acting as the exclusive financial advisor on this fundraising.
The latest funding will give Oyo, founded by Ritesh Agarwal in May 2013 with one hotel in Gurugram, the necessary funds to continue its aggressive expansion into China, West Asia, United Kingdom and other markets. China and India are Oyo’s top markets, and the company will invest around $600 million to strengthen its position in the neighboring country, according to the Mint.
“India has 4.3 million unbranded rooms and China has 35 million, but there is only a 25% occupancy rate. We want to change that. We are currently focused on Tier-2 and 3 cities in China, however we plan to expand this to Tier-4 and 5 too,” Agarwal told the publication.
According to the company, it operates more than 10,000 hotels with 211,000 rooms in over 350 cities across five countries. Out of the total rooms under its brand, 120,000 rooms are in India, followed by 87,000 in China and the rest in the United Kingdom, Malaysia and Nepal.
Before this round, the company had about $150 million cash. With the recent funding, the total cash reserves with the company will swell to $1.15 billion.
“We have an opportunity to grow bigger and become one of the top hospitality brands globally. This capital gives us the fire power to do that. We are just getting started,” Agarwal told Business Standard.
Last week, Oyo, India’s largest hospitality company, entered its first international market outside Asia with the launch of two townhouses in London. The company aims to sign up with 300 independent hotels by 2020.