India’s OYO raises $807m from SoftBank, founder-led RA Hospitality

Visual from OYO website

Indian hospitality major Oyo Hotels & Homes (OYO) has secured about $807 million in Series F funding from two of its existing backers — SVF India Holdings, a wholly owned subsidiary of SoftBank Vision Fund, and RA Hospitality.

OYO founder Ritesh Agarwal controls RA Hospitality Holdings (Cayman), which held 24.55 per cent of the paid-up share capital of the company prior to the latest infusion.

“This is a key development for OYO Hotels & Homes, and additional funds will help the business achieve its strategic objectives for 2020, which include accretive and sustainable growth, operational excellence and investment in corporate governance and training,” OYO spokesperson said.

The fresh equity infusion is part of OYO’s ongoing $1.5-billion financing round. It comes at a time when the company is reportedly cutting its global workforce by about 5,000 people. The reductions have been steepest in China, where the virus originated, Bloomberg reported.

According to the company’s filings with the Registrar of Companies (RoC) sourced by business signals platform Paper.vc, OYO has allotted a total of 15,325 Series F compulsory convertible cumulative preference shares (CCCPS) to the two entities at a price of $52,643.22 per share. SVF India Holdings has subscribed to 9,626 Series F CCCPS for about $507 million while RA Hospitality has injected about $300 million for 5,699 shares.

Post the allotment of shares, SVF India Holdings and RA Hospitality hold 50.59 per cent and 25.87 per cent, respectively, in OYO, the filings show. OYO had incorporated a clause in its charter in 2017 that restricted SoftBank from increasing its stake in the company beyond 50 per cent without prior approval from the founder and its largest minority investors.

“The latest filings of a shareholder resolution in February affirm our assessment of OYO’s restructuring and further financing either directly from or influenced by SoftBank Corp. In effect, the Japanese company’s Vision Fund has doubled down on OYO by facilitating partial exits for two early investors as part of this new ownership structure. Ritesh Agarwal’s increased stake, which was made possible through multiple loans from Japanese banking consortiums, gives him the notion of more control over the company he founded. However, it appears that SoftBank is making more decisions on how this company will be run,” Nikhil Kanekal, analyst, paper.vc said.

Last October, OYO had announced that Agarwal will invest $700 million into the company, while the rest will be contributed by its largest investor SoftBank and other unnamed investors. The Gurugram-based company also counts Lightspeed Venture Partners and Sequoia India among its backers.

Since its inception in 2012, OYO has aggressively expanded to 800 cities in 80 countries, including the US, the UK, and the Middle East, besides a host of European countries over the last two years. Meanwhile, in Asia, it has expanded its operations to China, Malaysia, Indonesia, and Japan.

The company currently counts India and China among its largest markets.

OYO’s revenue increased to $951 million for the fiscal year ended March 2019 from $211 million a year ago. Losses climbed to $335 million from $53 million as it expanded into China and other new markets. India accounted for roughly 63.5 per cent of its revenue in fiscal 2019, down from 99 per cent the year before.

In India, it has reportedly consolidated teams across its Oyo, Town House and cloud kitchen businesses. It’s also looking to scale down its co-living business Oyo Life.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.