Hospitality startup Oyo, is looking to raise approximately INR 1,000 crore ( USD 120 million) in fresh round of funding, primarily from the family offices of prominent Indian corporate executives and stock market experts, as reported by The Economic Times citing people aware of the development.
The startup valuation will plummet by 72 per cent from USD 9 billion in 2021 to USD 2.5 billion following this fundraiser, which is subjected to approval at its extraordinary general meeting (EGM) on Tuesday. Oyo had earlier withdrawn its IPO paper for the second time in May this year.
The potential investors for the latest fundraise include Anand Jain, a corporate strategy advisor, Ramesh and Rajeev Juneja, promoter brothers of Mankind Pharma, and Utpal Sheth, a close associate of the late Rakesh Jhunjhunwala, as per the ET report.
Additionally, the hotel aggregator is also in the final stages of negotiations with Khazanah Nasional, a Malaysian sovereign wealth fund, which is seeking certain rights before finalizing its investment.
“The order book from family offices is now at around INR 1,000 crore. (Oyo) also wants to allocate a piece to Khazanah Nasional, as it’s a sovereign wealth fund and adds more credibility to the cap table,” said a person familiar with the deal.
Ritesh Agarwal, the founder and chief executive of Oyo, may raise up to INR 250-300 crore from Khazanah, with the remaining funds coming from domestic investors.
This would be the first by an EV startup in the country and amongst the biggest new-age IPOs this year. The Securities and Exchange Board of India (Sebi) is expected to formally issue the approval in the coming days, the sources said. Ola Electric did not reply to a request for comment as of press time Tuesday.
Meanwhile, Incred Wealth is assisting Oyo in pitching the fundraise to a group of high net-worth individuals and has created a special purpose vehicle to issue shares in Oyo’s parent company to the participating family offices. The EGM notice indicates that the startup will consider approving an initial fundraise of around INR 500 crore, with the total funding, including family offices and institutional investors, expected to close by the end of the month.The average investment from family offices is expected to be between INR 15-30 crore, with some potentially investing more. Investors who enter at this valuation believe they can still generate good returns if Oyo goes public at a higher valuation in the future.
Agarwal, lately, has been engaging with investors through webinars and one-on-one calls to explain his business and company plans. In 2022, SoftBank, Oyo’s largest investor, reduced its valuation of the company to USD 2.7 billion from USD 3.4 billion, although these valuations were not made public by the Japanese investor.
