SoftBank and OYO acquire 80 per cent stake in MDI

Japan: SoftBank Group and Indian short-term rental and hotel startup OYO have acquired an 80 per cent stake together in Japanese rental apartment operator MDI.

According to one source reportedly close to the deal, the acquisition cost over $100 million though OYO has declined to comment on the price and the stake in the joint venture to buy MDI. SoftBank and MDI also declined to comment.

In the fiscal year ending in March, MDI reported revenue of 114 billion yen ($1 billion).

The deal suggests Masayoshi Son, the CEO of SoftBank, is continuing to weigh up new investments despite the situation at WeWork, of which it is the largest investor.

WeWork recently withdrew its initial public offering over disagreements of the company’s valuation by major shareholders. SoftBank’s Vision Fund is also a major shareholder in OYO, and SoftBank affiliates have already led  joint ventures with OYO in Japan.

The source told Nikkei Asia Review: “Real estate is a capital intensive business. The involvement of SoftBank is a strong endorsement for OYO in Japan.”

An OYO spokesperson said in an email that it is aiming to “leverage MDI’s strong network and business development capabilities in Japan’s real estate market”.

Following the acquisition, OYO plans to list a portion of the 37,000 rooms operating under MDI management on its OYOLife room rental platform. This will supplement the firm’s existing inventory of 2,000+ rooms in Japan.

OYOLife, which launched in March, takes out long-term leases on apartments and refurbishes the units.

OYO is putting its investments into funding acquisitions across the market, in order to boost growth and diversify its existing offering. In May, it purchased Amsterdam-based Leisure Group for an estimated $402 million and in August, it bought the Hooters Casino Hotel in Las Vegas for $135 million with its American partner Highgate.

It now offers an established network of vacation rentals and hotels in 80 countries around the world.