This round of funding is expected to accelerate the process of merger between Oyo Rooms and Zo Rooms
After months of delay, hotel aggregator major Oyo Rooms might soon announce the merger with Zo Rooms. Placing further bets on one of its investments in India, Japan’s SoftBank Group Corp has pumped in around $61 million into the Ritesh Agarwal-led company. Though the deal was announced earlier this year, it was apparently not completed due to lack of funds.
Sources however said that the sixth round of funding is divided into two tranches with $29 million coming as a mix of equity and debt. Oyo Rooms declined to comment on the issue.
This is SoftBank’s first major funding round in its Indian investments after Nikesh Arora’s exit from the company where he served as the president.
According to documents filed by Oravel Stays Pvt. Ltd the company that owns Oyo in Registrar of Companies, existing investor Greenoaks Capital, Sequoia Capital and Lightspeed Venture Partners did not participate in this round of funding.
According to industry experts, after the Zo acquisition is complete, Tiger Global one of its main investors would come on board with Oyo. “Oyo would now aim at being the biggest hotel aggregator in India and compete at a much greater level with companies such as Makemytrip. Next year the company might also go for a bigger funding round with its marquee investors on board,” said a source close to the company.
For the last few months Oyo has been in the market for funds but was not able to raise any with investors playing it cool after a rush of funding rounds last year.
According to sources, Oyo’s valuation after the funding round stands at around $650 million-$700 million. A year back Oyo had managed to raise $100 million funding round led by SoftBank Corp, and its existing investors Lightspeed Venture Partners, Sequoia Capital India, and Greenoaks Capital.
In April this year too, the company had reportedly raised $100 million from existing investors including Softbank, Sequoia Capital, Lightspeed Venture Partners, Greenoaks Capital, DSG Consumer Partners and Venture Nursery.
The company now hopes to complete its expansion and take on the likes of Treebo Hotels to be the top player in India.
Oyo in May said that it has managed to achieve unit profitability at an aggregate level across its presence in 170 cities of India. “Our team delivered 15x YoY growth with 2.3 million booked room-night transactions in Q1 Jan-Mar 2016 while our GMV continues to grow aggressively every month, 95 percent of our traffic comes from our own sales channels such as app, web and call-centre. The cities driving profitability for us are those that have matured over the last year which include Gurgaon, Delhi, Hyderabad and Kolkata. We plan to grow deeper in all key business and leisure cities and triple our inventory by December 2016,” Agarwal had said then.
Oyo has initiated 5,855 hotels in its network with a total inventory of 68,300 rooms. It aims to triple its inventory by December 2016.
Softbank pumps in $61 mn into Oyo Rooms
