India’s largest budget hotel company Oyo Rooms seems to be in all hurry to make merry when the sun is shining bright. This probably explains the reasons behind latest reports that Oyo is currently in advanced talks to raise up to $1 billion in a new fundraising round. While this is news in itself, but the bigger news is that this new fundraising round will propel the Gurgaon based startup to market valuation of whopping $4 billion.
The market valuation of staggering $4 billion, which is enormously higher than Oyo’s current market valuation of nearly $850 Mn, will capitulate the company among India’s most valued internet startups; behind only Flipkart and Paytm.
According to sources, Oyo is presently holding talks with its largest investor SoftBank and other investors. The company is reportedly aiming to secure around $500 Mn – $1 Bn from the new fundraising round. Sources add that the company has already got multiple term sheets to initiate the deal and the deal is mostly likely to be sealed by end of this month.
Sources are claiming Sequoia Capital and Lightspeed will be among other investors that will participate in this fundraising round.
Last month Techpluto reported that Oyo is also holding talks with Tencent and General Atlantic to raise fresh funds. But now reports suggest that these talks could not move ahead.
Oyo claims that it is inching towards profit
Although Techpluto is not in possession of Oyo’s profit and loss numbers, the company claims that it is confidently marching towards profitability. The SoftBank backed firm claims that it has clocked 17 million booked rooms in India during first five months of this year. Currently, the company is estimated to have 100,000 exclusive rooms under its management, with formidable presence across 230 Indian cities.
Oyo has also significantly increased the commission that it charges from hotel from 12% to nearly 20%, as per industry sources.
Besides, Oyo is going full throttle to expand business across China, where it officially entered earlier this year. The company announced in an official statement that it currently operates 50,000 rooms in the world’s most populous country.
Oyo during the last two years has completely moved to franchisee model, where it now enjoys significant control over the entire property. The company claims that this has helped in improving customer experience.