Putting his money where his business is, Oyo Hotels & Homes Founder/CEO Ritesh Agarwal, through RA Hospitality Holdings (Cayman), has signed a $2 billion primary and secondary management investment round, increasing his stake in the company from 10 percent to 30 percent.
In a statement, the company claimed the deal is one of the first founder- and executive-led management purchases in the hospitality and technology sector, and is supported by global institutional banks and his financial partners (subject to regulatory and shareholder approvals).
According to the Financial Times, the deal pushes Oyo, which claims to now be the world’s third-largest hotel chain behind Marriott and IHG, close to a $10 billion valuation.
Lightspeed Venture Partners, and Sequoia India, Oyo’s early supporters, are selling part of their holdings in order to help the founder increase his stake while “remaining invested significantly in the company’s long-term mission,” and will each receive $500 million as part of the transaction, the Financial Times reported, Other Oyo funds and businesses that have invested in Oyo since its launch six years ago include Airbnb, SoftBank Vision Fund, Greenoaks Capital and Hero Enterprise.
Confidence in Plans
Munish Varma, managing partner at SoftBank Vision Fund, expressed confidence for Agarwal’s growth plans for the company. “It has been an exciting journey so far and we hope to achieve many more milestones together in the time to come,” said Varma..
“As the company’s first institutional investor, Lightspeed is fortunate to have been part of Oyo’s journey from a fledgling start-up in India to a transformative company in the hospitality industry globally,” added Bejul Somaia, partner at Lightspeed India Partners Advisors. “We remain committed to supporting Ritesh and the Oyo team as the company embarks on its next phase of growth globally.”
Five years after Sequoia Capital India Advisors first partnered with Agarwal and the Oyo team, Mohit Bhatnagar, managing director at Sequoia, noted the company’s milestone of 1 million rooms across India, China, Southeast Asia, Europe and the United States. “This is the kind of stuff start-ups and ventures investing dreams are made of,” Bhatnagar said. “We remain committed to supporting this world-class management team as they continue to create living spaces across the world.”
Oyo more than quadrupled its revenue growth in June compared to June 2018. The company has 1 million rooms under management across hotels and homes, 23,000 hotels worldwide, 46,000 vacation homes and more than 200,000 rooms in India alone. The company now has a presence in more than 800 cities in 80 countries.
Earlier this month, Oyo committed more than $50 million to have 20,000 guestrooms in a minimum of 10 Vietnamese cities by the end of 2020. That plan, in turn, followed the company’s announcement that it would invest $300 million in growth, headquarters talent, competency building and infrastructure development across the United States over the next few years.
Just this week, Oyo moved into the co-working sector to launch Oyo Workspaces through the company’s acquisition of India-based co-working company Innov8. The new division will be led by Rohit Kapoor, CEO of new real estate businesses.