Indian hotel platform Oyo seeks $ 600 million
The current surge in COVID-19 cases in India is hitting SoftBank-backed Oyo hotels hard, so the startup is on the hunt for cash. The hotel platform wants to raise $ 600 million in debt to boost its bottom line, Bloomberg reported.
The board of directors of the startup’s parent company, Oravel Stays Pvt., Has approved an institutional term loan plan, a source told Bloomberg. The source was anonymous because the deal is not yet public.
Oyo has had various commercial relationships with its hotel partners. Originally, Oyo guaranteed hotel partners a minimum monthly payment, but that collapsed once the pandemic hit. Now, Oyo earns a commission on hotel rooms that she reserves for other companies.
In March, Oyo said he was withdrawing from the US and European markets and severing his Latin American partnership.
Startup Licorne, founded in 2013, recorded monthly losses of $ 15 million in 2020 as the global pandemic hit the hospitality, leisure and travel industries like a hurricane. Oyo has cut its 30,000 employees worldwide by more than 65%.
In addition, SoftBank, Oyo’s largest investor, reduced Oyo’s valuation to $ 3 billion, down $ 7 billion from 2019.
“Growth will be moderate from what it was before,” Ritesh Agarwal, founder and CEO of Oyo, told the Financial Times earlier this year.
At the end of 2020, Agarwal told employees that the Indian startup has around $ 1 billion in cash, is recovering from the effects of the pandemic and is still considering an initial public offering (IPO) of shares.
“The goal of our management is to ensure that we have a well-designed, IPO-ready company available for our shareholders and board members to make the right decision,” said Agarwal.
Oyo has never been profitable. However, losses widened in 2019 as the company expanded into China at the behest of SoftBank. Oyo had strongly developed in China in 2018 and 2019, making this country its second market behind India.
Then came the trouble, in the form of the COVID-19 crisis that hit the travel industry around the world.