OYO's Funding Surge: A New Chapter in Hospitality
August 11, 2024, 9:31 pm
Location: United States, South Carolina, Greenville
Employees: 5001-10000
Founded date: 1995
Location: India, Haryana, Gurugram
Employees: 5001-10000
Founded date: 2012
Total raised: $6.51B
OYO, the hospitality giant, is back in the spotlight. It has successfully raised Rs 1,457 crore, roughly $175 million, in its latest funding round. This marks a significant moment for the company, which has faced its share of challenges in recent years. The investment comes from a consortium of notable players, including InCred Wealth, Patient Capital, J&A Partners, and ASK Financial Holdings.
The recent funding round is a part of OYO's Series G, which has now accumulated nearly Rs 1,040 crore. This follows an earlier raise of Rs 416.85 crore in the same series. The latest round was approved by an overwhelming 99.99% of shareholders during an extraordinary general meeting (EGM) held on August 8.
OYO's valuation remains steady at $2.4 billion, the same as the first tranche of Series G issued by InCred in July. This consistency in valuation is a silver lining amid a backdrop of fluctuating fortunes. The funds will be channeled into growth initiatives and global expansion plans, a crucial step for a company that has been navigating turbulent waters.
The investment structure is interesting. It involves Compulsory Convertible Cumulative Preference Shares, each priced at Rs 29. This method of raising capital allows OYO to attract investors while maintaining a degree of control over its equity structure. The breakdown of share allocations reveals a diverse group of investors. InCred will receive over 26 million shares, while J&A Partners will acquire around 41 million shares. Patient Capital and ASK Financial will also make significant contributions.
This funding round is not just about numbers; it reflects a broader narrative. OYO's journey has been marked by highs and lows. Once valued at $9.6 billion in August 2021, the company has seen its valuation plummet by 70%. This decline serves as a stark reminder of the volatility in the startup ecosystem.
Despite these challenges, OYO has shown resilience. The company reported its first annual net profit of Rs 100 crore in FY24. Revenue from operations grew by 14.3%, reaching Rs 5,464 crore, up from Rs 4,871 crore in FY22. The firm has also managed to cut its losses by 33.7%, a commendable feat in a competitive landscape.
However, the road ahead is not without obstacles. OYO has postponed its plans to go public, withdrawing its draft papers for the second time due to unfavorable market conditions. The company has indicated that it will refile its IPO papers after securing a substantial funding round, which has now been achieved.
The involvement of high-profile investors adds credibility to OYO's plans. InCred, led by serial investor Ashish Kacholia, is a significant player in this round. The family office of Mankind Pharma promoters, J&A Partners, and ASK Financial Holdings also bring their expertise and resources to the table. This diverse group of investors is a testament to OYO's potential for growth and recovery.
OYO's management is optimistic. The capital raised will be pivotal in supporting its expansion strategy. The company plans to launch 25 new Sunday Hotels across India, a move that underscores its commitment to growth. This expansion is not just about numbers; it’s about creating experiences. OYO aims to enhance its offerings and capture a larger share of the hospitality market.
The appointment of Sumer Juneja from SoftBank Investment Advisors as a Non-Executive Director on OYO's Board is another strategic move. His experience and insights will be invaluable as OYO navigates its next phase of growth. The board's approval of increasing the company's authorized share capital signals a readiness for further expansion and investment.
In conclusion, OYO's latest funding round is a beacon of hope. It reflects the company's determination to rise from the ashes of its past challenges. With a solid financial backing and a clear growth strategy, OYO is poised to reclaim its position in the hospitality sector. The journey ahead will require agility and innovation, but OYO has shown that it can adapt and thrive. The hospitality landscape is ever-changing, and OYO is ready to embrace the future.
The recent funding round is a part of OYO's Series G, which has now accumulated nearly Rs 1,040 crore. This follows an earlier raise of Rs 416.85 crore in the same series. The latest round was approved by an overwhelming 99.99% of shareholders during an extraordinary general meeting (EGM) held on August 8.
OYO's valuation remains steady at $2.4 billion, the same as the first tranche of Series G issued by InCred in July. This consistency in valuation is a silver lining amid a backdrop of fluctuating fortunes. The funds will be channeled into growth initiatives and global expansion plans, a crucial step for a company that has been navigating turbulent waters.
The investment structure is interesting. It involves Compulsory Convertible Cumulative Preference Shares, each priced at Rs 29. This method of raising capital allows OYO to attract investors while maintaining a degree of control over its equity structure. The breakdown of share allocations reveals a diverse group of investors. InCred will receive over 26 million shares, while J&A Partners will acquire around 41 million shares. Patient Capital and ASK Financial will also make significant contributions.
This funding round is not just about numbers; it reflects a broader narrative. OYO's journey has been marked by highs and lows. Once valued at $9.6 billion in August 2021, the company has seen its valuation plummet by 70%. This decline serves as a stark reminder of the volatility in the startup ecosystem.
Despite these challenges, OYO has shown resilience. The company reported its first annual net profit of Rs 100 crore in FY24. Revenue from operations grew by 14.3%, reaching Rs 5,464 crore, up from Rs 4,871 crore in FY22. The firm has also managed to cut its losses by 33.7%, a commendable feat in a competitive landscape.
However, the road ahead is not without obstacles. OYO has postponed its plans to go public, withdrawing its draft papers for the second time due to unfavorable market conditions. The company has indicated that it will refile its IPO papers after securing a substantial funding round, which has now been achieved.
The involvement of high-profile investors adds credibility to OYO's plans. InCred, led by serial investor Ashish Kacholia, is a significant player in this round. The family office of Mankind Pharma promoters, J&A Partners, and ASK Financial Holdings also bring their expertise and resources to the table. This diverse group of investors is a testament to OYO's potential for growth and recovery.
OYO's management is optimistic. The capital raised will be pivotal in supporting its expansion strategy. The company plans to launch 25 new Sunday Hotels across India, a move that underscores its commitment to growth. This expansion is not just about numbers; it’s about creating experiences. OYO aims to enhance its offerings and capture a larger share of the hospitality market.
The appointment of Sumer Juneja from SoftBank Investment Advisors as a Non-Executive Director on OYO's Board is another strategic move. His experience and insights will be invaluable as OYO navigates its next phase of growth. The board's approval of increasing the company's authorized share capital signals a readiness for further expansion and investment.
In conclusion, OYO's latest funding round is a beacon of hope. It reflects the company's determination to rise from the ashes of its past challenges. With a solid financial backing and a clear growth strategy, OYO is poised to reclaim its position in the hospitality sector. The journey ahead will require agility and innovation, but OYO has shown that it can adapt and thrive. The hospitality landscape is ever-changing, and OYO is ready to embrace the future.