IT giant Microsoft is likely to pick up a stake in Oyo that could value the hospitality company at around $9 billion (Rs 67,000 crore).
While the details of the deal are under wraps, an agreement is likely before Oyo’s initial public offering.
Oyo is yet to fix a date for the IPO. Observers said the investment by Microsoft could only quicken the exercise.
Oyo recently raised $660 million, which is nearly Rs 4,920 crore, from global institutional investors as a term loan.
The capital will be used to pare debt and for other business investments. Oyo said in a statement that the offer — a term loan B funding — was subscribed 1.7 times, with the company receiving commitments of close to $1 billion from leading institutional investors. Term loan is a senior secured syndicated credit facility.
Oyo is backed by marquee investors such as SoftBank Vision Fund, Sequoia Capital, Lightspeed Ventures and Hero Enterprise.
The hospitality industry has been amongst the worst hit during the pandemic, but the company’s founder and Group CEO Ritesh Agarwal sounded optimistic.
Agarwal earlier this year said the company “is on a steady path of resurgence in 2021” and is seeing signs of recovery across India, Europe, and Southeast Asia. Oyo’s survival through the Covid crisis and its resurgence shows a company with strong fundamentals and high value potential, he had said.
The news of the Microsoft investment comes at a time of strong interest among overseas investors in domestic start-ups.
Swiggy for instance had mobilised $1.25 billion from SoftBank and others, while rival Zomato had a bumper listing on the bourses. The primary market is set to witness further action with players such as One97 Communicatons, Nykaa and Policybazaar ready to file their papers with the market regulator.
The deal may involve Oyo shifting to use Microsoft’s cloud services, Reuters said citing a TechCrunch report.
Oyo is one of India’s largest start-ups. Founded by Agarwal in 2013, it aggregates bookings for budget hotels around the world. The hotel aggregator has endured months of layoffs, cost cuts and losses since the Covid-19 pandemic outbreak last year.