Oyo to raise $1.5 billion funding, founder to invest $700 million

Through a fresh round of financing, Softbank backed Oyo Hotels, and Homes is reportedly raising $1.5 billion with $700 million investment by founder Ritesh Agarwal.

The raised funded will be used by the company to partially buy out the stakes by Agarwal from the two early investors in OYO – Sequoia Capital and Lightspeed Venture Partners. After the development, Agarwal’s stake will shoot up to 30% from 10% at present.

This is the first time when a new-age start-up had picked up debt financing to provide a partial exit to early investors and to invest primary capital in his company. In a statement, Agarwal said, “Our immediate goal, however, is to make forward-looking investments so that we can achieve our mission, while delivering on our fiduciary responsibility to our investors by building a sustainable business.”

Through the recent development, this six-year-old company through a multi-layered transaction has set a new valuation of approximately 10 billion dollars. The company also said that it is also raising almost $800 million in primary capital from the existing investors. Softbank will make the major investment, while Greenoaks Capital and Airbnb will participate in $1.5 billion funding F round.

The company also said that a significant part of the funding would be invested in expanding Oyo’s business in the US. It was reported in June that the company is planning to invest $300 million over a couple of years in the US – the largest consumer market of the world. At present, Oyo has a presence in 21 states in the US, across 60 cities with almost 7,500 rooms under its control.

Oyo is the second biggest chain of hotels, workspaces, homes and managed living. It has almost 35,000 hotels and 125,000 vacation homes with over 1.2 million rooms under its management. It is present in over 800 cities across 80 countries under brands such as Dandland, Dancentre, Belvilla, Oyo Homes as well as Germany-based Traum-Ferienwohnungen.