Aligned to its 2023 target of becoming the world’s largest hotel chain, OYO Hotels & Homes has raised $73 million (Rs 515 crore) from the hospitality marketplace Airbnb. “This investment by Airbnb, earlier speculated as per media reports as $100-200 million, is part of OYO s Series E round, that began in September last year,” a source familiar with the development told Financial Express Online on condition of anonymity.
OYO had allotted 2,163 Series E compulsorily convertible cumulative preference shares on March 27, 2019, to Airbnb as per the “resolution passed by circulation by the board of directors of Oravel Stays (OYO’s parent company),” showed regulatory filing sourced by business signals platform Paper.vc.
“The part (current funding) was oversubscribed and hence OYO has closed the Series E round with this deal,” the source said.
OYO has raised a total of $1.3 billion in four rounds since September 2018 for its Series E round. The rounds have been led by Softbank Vision Fund, Grab, and now Airbnb, as per deals tracker Crunchbase.
However, the regulatory filing doesn’t talk about shareholders agreement. “This means that the investment is perhaps being negotiated or that Airbnb has acquired shares by agreeing to the current shareholder terms through a deed of adherence,” said Vivek Durai, Founder, Paper.vc.
How Big is OYO?
On the other hand, investing up to $200 million in OYO, which according to Dr Apoorv Ranjan Sharma, Co-founder and President, Venture Catalysts, and among the early backers of OYO valued at $7 billion, means only a minority stake for Airbnb.
Airbnb won t get much equity and hence they will be a minority shareholder of OYO. This will strengthen Airbnb s India and China business as you have to partner with a large local brand to enter a market, Dr Sharma had told Financial Express Online.
Even at $7 billion, OYO is as big as the cost of India’s Lok Sabha elections this year. The world’s largest democracy will spend a whopping Rs 500 billion ($7 billion) on elections this year, as per research firm Centre for Media Studies.
OYO had reported over 3X jump in India revenues from Rs 120 crore in FY17 to Rs 416 crore in FY18 while the net loss went slightly up to Rs 360 crore in last fiscal year from Rs 355 crore in the preceding year.
OYO announced setting up of a joint venture with Softbank, to begin its Japan operations last week. Softbank is OYO s largest shareholder with a reported stake of around 45 per cent.