The investment in the hotel room aggregator is likely to be made at a valuation of nearly $9bn
An Oyo branded hotel in Malaysia. (Credit: Chongkian/Wikimedia Commons)
Tech giant Microsoft is reportedly in advanced talks to invest in Oyo Hotels & Homes, an India-based hotel start-up.
The potential deal could see the hotel room aggregator valued at around $9bn, reported TechCrunch, citing undisclosed sources familiar with the matter.
It is not clear how much Microsoft will be investing but the deal could close this week, as per a source.
The deal may also involve the SoftBank-backed Oyo move to Microsoft’s cloud services, said one of the sources.
Founded in 2013 by Ritesh Agarwal, the hotel start-up boasts of having more than 44,000 budget hotels with over 1.2 million rooms in its network. The company operates in more than 800 cities in 80 countries, which include India, Japan, the US, and others.
The possible investment from Microsoft is seen as a precursor for the hospitality company before it launches an initial public offer (IPO). The company is exploring more such deals ahead of the IPO, reported The Economic Times.
Oyo plans to use funds from the new investors for ramping up its technology as well as for boosting its market share.
As per the publication, Microsoft will initially take a small stake in the hotel start-up but will have an option to increase it later.
Earlier this month, Oyo secured a Term B Loan (TLB) funding of $660m from global institutional investors. The company at that time said that it will use the funds for clearing its past debts, bolster the balance sheet, and other business purposes such as technology investment.
In late 2019, the hotel start-up secured $1.5bn in a Series F funding round from RA Hospitality and other existing investors. Prior to that, in September 2018, the company raised more than $1bn in a funding round led by SoftBank.