Softbank-backed OYO Hotels & Homes is close to raising $1.5 billion through a growth round led by RA Hospitality, owned by OYO founder Ritesh Agarwal.
The company plans to use a significant part of the funds for growth in its US operations, and in strengthening the company’s position in the vacation rental business in Europe.
Cayman Island-based RA Hospitality Holdings will infuse around $700 million as primary capital and the balance $800 million will be provided by existing investors. The company did not disclose the identity of the existing investors participating in the funding round.
Other than Softbank, Lightspeed India, Sequoia Capital, Greenoaks Capital, Hero Enterprise and China Lodging Group are the existing investors in the company.
As a part of this round, US-based venture capital firms Lightspeed Venture Partners and Sequoia Capital will sell a part of their stake to RA Hospitality, said the company in an official statement.
The announcement comes on the heels of Competition Commission of India’s approval for founder’s massive $2 billion plan to buy back shares and infuse funds into the company.
On completion of the transaction, Agarwal will reportedly become the second-largest shareholder in the company, increasing his stake to around 30%. Japan-based Softbank is said to be the largest shareholder in OYO Hotels with around 45%.
OYO Hotels had raised $1 billion in a funding round led by Softbank along with existing investors in 2018.
“The growth across verticals in India and globally has been phenomenal and we truly believe that we will be able to build a truly global brand out of India, while ensuring that the business is run efficiently and with a clear path to profitability,” said Ritesh Agarwal, founder and CEO (global), OYO Hotels.
“Our immediate goal, however, is to make forward-looking investments so we can achieve our mission while delivering on our fiduciary responsibility to our investors by building a sustainable business,” he added.
As of September, OYO has 112 hotels in 60 cities in the US and was said to be looking to raise funds to buy premium hotels in the country.