India: Softbank-backed hospitality chain OYO has secured a $660 million loan from global institutional investors, claiming that the offer was oversubscribed by 1.7 times.
The deal came in the form of a Term Loan B [TLB], or institutional term loan, including nominal repayment over five to eight years, and was arranged predominantly by JP Morgan, Deutsche Bank, and Mizuho Securities.
Though the agreement for the loan was initially struck in May, OYO states that it upsized the deal by ten per cent from $600 million due to “strong” interest from investors.
OYO says it will use the funding injection to pay off past debts, strengthen its balance sheet and invest in product technology.
The chain, which offers more than 43,000 hotels and 150,000 homes in 80 countries through its platforms, also claims to be the first Indian company to raise capital through the TLB route, having been publicly rated by renowned international rating agencies, Moody’s and Fitch.
OYO Group CFO Abhishek Gupta said: “We are delighted by the response to OYO’s maiden TLB capital raise that was oversubscribed by leading global institutional investors. We are thankful for the trust that they have placed in OYO’s mission of creating value for owners and operators of hotels and homes across the globe.
“This is a testament to the strength and success of OYO’s products at scale, our strong fundamentals, and high value potential. OYO is well capitalised and on the path of achieving profitability.
“Our two largest markets have demonstrated profitability at the slightest signs of industry recovery from the Covid-19 pandemic,” he added.
Dr W. Steve Albrecht, a member of OYO’s Board of Directors and Chairman of the Audit Committee, said: “As a part of OYO’s board, it’s heartening for me to see the strong interest from the investor community in the company, leading OYO to become the first Indian startup to be independently assessed by the world’s leading credit rating agencies – Moody’s and Fitch.
“Today, OYO has 100k+ partners globally who are running successful businesses by utilising OYO’s proprietary technology, products, and revenue management capabilities for delivering trusted accommodations for guests,” he added.
Earlier this year, OYO reported that its valuation had rebounded from $8 billion to $9 billion, following a $7.4 million Series F1 funding round in January, which was led by Hindustan Media Venture. OYO said it would use the funding to strengthen its technology stack in order to enhance its partner and customer experience.
The chain had previously raised in the region of $3.2 billion in capital across 17 funding rounds led by 23 investors, including the likes of SoftBank Vision Fund, Airbnb, Sequoia Capital, Lightspeed Ventures, and Hero Enterprise.
Despite that, OYO was forced to lay off or furlough a significant portion of its global workforce last year [including making at least 90 per cent of its US team redundant] and restructure its business in Japan, after posting escalating losses in consecutive years.
OYO raised as much as $1.5 billion in Series F funding as recently as October 2019, through founder and CEO, Ritesh Agarwal, Softbank Group and other investors. It came as part of a bid to expand into the US and European markets, prior to the Covid-19 pandemic.