Oravel Stays Ltd., the parent of OYO, is apparently in talks with investors to raise fresh funding for $200 million to strengthen its expansion strategy in the US. The latest development comes weeks after the company acquired G6 Hospitality, the parent of Motel 6 and Studio 6, an all-cash transaction valued at $525 million, approximately INR 4,382.72 crore, from Blackstone Real Estate.
Since its American launch in 2019, OYO has continued expanding operations and now handles more than 320 hotels across 35 states. In 2023, the company added nearly 100 hotels to its list, while planning for more than 250 properties through the course of 2024.
Oravel Stays is raising $200 million dollars from institutional investors abroad and private investors in India with an estimated valuation ranging between $4.5 billion and $5 billion dollars. In August this year, OYO had raised INR 1,457 crore, or approximately $175 million, in a down round from Singapore-based Patient Capital, besides J&A Partners and ASK Financial Holdings. Patient Capital invested INR 830 crore, and J&A Partners and ASK further invested INR 120 crore and INR 14 crore, respectively.
Additionally, OYO is looking to refinance $450 million of its outstanding debt in the hope of reducing interest rates from 14% to a range of 10% to 10.5% and extending the loan maturity by three years to fiscal year 2029. As a precaution, the company is adding a drawable bridge facility of $350 million to provide interim funding until the equity raise is completed. The $350 million is a contingency plan and may not be drawn,” a source stated.
OYO, founded in 2012 by Ritesh Agarwal, aims to provide easily bookable and affordable accommodation around the world. As stated by the company, it offers over 40 integrated products and solutions in more than 35 countries, including India, Europe, and Southeast Asia. As it readies for its IPO next year after shelving its plans earlier, OYO is planning to re-file its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India after completing the refinancing of its $660 million Term Loan B.
The company has turned EBITDA positive for fiscal year 2024 with a net profit of INR 229.5 crore compared to a net loss of INR 1,286.5 crore in the previous fiscal. The future agenda for OYO comprises scaling premium inventory and international presence. OYO-owned Innov8 is also entering the office management sector, much like the business models of established companies like Awfis and IPO-bound Smartworks.
OYO is undergoing significant changes in its leadership as the company is promoting five executives across the technology, product, strategy, operations, and distribution verticals.
