Microsoft to invest in Oyo at a valuation of $9 billion

Oyo Hotels & Rooms is allegedly valued at $9 billion in the agreement, which offers Microsoft the option to raise its investment in the latter at a later date.

Microsoft to invest in Oyo at a valuation of $9 billion

Microsoft has agreed to make a strategic investment in Ritesh Agarwal's Oyo Hotels & Homes for an undisclosed sum, valuing the firm at $9 billion. The firm is likely to switch to Microsoft's cloud services as part of the deal. Oyo's valuation was over $10 billion in 2019, but Softbank, a significant investor in the business, reduced it to $3 billion in subsequent quarters. Microsoft will purchase a modest share in the hotel room aggregator but would have the opportunity to increase its holding later.

According to a story in the Economic Times, the SoftBank-backed business may be considering additional similar acquisitions ahead of its initial public offering (IPO). The most recent development comes after Oyo raised $660 million in term loan B (TLB) investment from global institutional investors, which was 1.7 times oversubscribed.

It stated in a statement that TLB refers to a tranche of senior secured syndicated credit facilities from global institutional investors. Moody's and Fitch, two of the world's major rating agencies, have publicly rated Oyo, making it the first Indian start-up to do so.

"We are thrilled with the reaction to Oyo's inaugural TLB capital raising, which was oversubscribed by top global institutional investors. We appreciate the faith they have shown in Oyo's objective of generating value for hotel owners and operators... This is a tribute to Oyo's product strength and scalability, as well as our solid fundamentals and high-value potential," said Oyo Group Chief Financial Officer Abhishek Gupta.

SoftBank Vision Fund, Lightspeed Ventures, Sequoia Capital, Airbnb, and Hero Enterprises are among the investors in the hospitality firm. Even as the sector grapples with the blow given by the Covid-19 epidemic, which has put several rivals out of business, Oyo is expected to utilise the financing to scale up its technologies and expand its reach in the hotel market with more market share. HT Media Ventures invested $7.31 million in Oyo in a series F1 financing round earlier this year.

Microsoft had previously shown interest in making strategic investments in rising market disruptors such as India. If the Microsoft-Oyo transaction goes through, it will be the American tech giant's latest investment in an Indian firm. In India, the company has invested in several startups, including news aggregation and short-video platform DailyHunt, e-commerce behemoth Flipkart, and logistics SaaS provider FarEye.

Source: Times Now