Hospitality startup Oyo is in the advanced stages of raising approximately Rs 1,000 crore ($120 million) from the family offices of prominent corporate leaders and market experts. This move follows the withdrawal of its Draft Red Herring Prospectus (DHRP) by parent company Oravel Stays, with plans to refile it with SEBI to raise $450 million through the sale of dollar bonds.
Oyo is expected to hold an extraordinary general meeting (EGM) on Tuesday to approve the fundraise, according to a report in The Economic Times. The funding is anticipated to include investments from Anand Jain, corporate strategy advisor; Ramesh and Rajeev Juneja, promoters of Mankind Pharma; and Utpal Sheth, a close associate of the late Rakesh Jhunjhunwala.
The proposed funding round is expected to value Oyo at around $2.5 billion, significantly lower than its 2021 valuation of $9 billion.
Oyo, led by Ritesh Agarwal, is in final negotiations with Malaysian sovereign wealth fund Khazanah Nasional, discussing specific rights before concluding the deal. Sources indicate that Agarwal might raise Rs 250-300 crore from Khazanah, with the remainder coming from domestic investors. Incred Wealth is reportedly assisting Oyo in pitching the fundraise to high net-worth individuals through a special purpose vehicle.
The EGM will consider an initial fundraise of around Rs 500 crore. Most contributions are expected to be between Rs 15-30 crore, though some may be larger.
Ritesh Agarwal recently announced on social media that Oyo achieved its first net profitable financial year, recording a net profit of Rs 100 crore. “While a delighted customer or hotel partner brings the biggest smile to my face, our first cut financials of FY24 have me humbled as well. We had our maiden net profitable financial year at nearly Rs 100 crore. This was our eighth consecutive quarter of positive EBITDA, and we also have a cash balance of about Rs 1,000 crore,” he said. Additionally, rating agency Fitch upgraded Oyo’s credit rating.
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By Proptechbuzz
By Ravi Kumar
