The Oyo hotels, financed by the Japanese conglomerate SoftBank Group Corporation announced on Monday a $1.5 billion deal with its existing investors that will make tighter the control of the founder and provide the fresh capital for the company.
Agarwal, who founded Oyo in 2013, developed it into India’s second most valuable startup with a valuation of nearly $10 billion. The service comprises 1.2 million rooms, including 590,000 rooms in China, in over 80 countries. Earlier this year, it entered the United States and now has 7,500 rooms in 60 cities.
Oyo founder Ritesh Agarwal will put the company as a primary investment in $700 million, said an Oyo spokeswoman, adding the money was part of the $2 billion debt he raised in July. The deal is worth $10 billion for the Gurugram-based company, the firm said. Existing investors will invest $800 million in Oyo, including Greenoaks Capital and Airbnb.
The rest of the money will come from other existing investors, Oyo said, most of which will be used to expand the businesses of the company in the United States and Europe.
Other than SoftBank, Oyo’s investors include Lightspeed Ventures and Sequoia Capital.
Oyo, which operates in over 80 countries, is expanding in the U.S. and Europe, where vacation rentals are managed. In the United States, the Hooters Casino Hotel in Las Vegas was rebranded as its own by Oyo.
“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,” Agarwal said.
Mr. Agarwal said that India and China contributed for two-thirds of the total revenue of the company, while a fifth is also from Europe and the United States.
However, as the business is looking for growth, some hotel owners who have associated with it have complained that their income was hit by higher fees.