A budget hotel chain in India Although the epidemic cost Oyo a large chunk of its revenue, the company is getting closer to obtaining a new investor: Microsoft. According to sources familiar with the situation, Microsoft is in advanced discussions to invest in Oyo, valuing the Indian company at over $9 billion. The investment’s projected magnitude is unknown. According to one insider, a deal may be finalized as soon as Friday.
In 2019, Oyo was valued at over $10 billion, however, SoftBank, a significant investor in the Indian firm, had cut its valuation to $3 billion in previous quarters. One of the sources, who, like everyone else, requested anonymity when discussing private affairs, said the potential agreement might include Oyo switching to Microsoft’s cloud services. Ritesh Agarwal, the founder, and CEO of Microsoft and Oyo declined to comment on Thursday evening.
In recent years, Oyo, one of India’s most valued companies, has aggressively expanded into new areas such as Southeast Asia, Europe, and the United States. However, several of its blunders — a “toxic atmosphere,” a governance failure, and a sour relationship with many hotel owners — have hampered its expansion. The epidemic struck just as the firm was promising to strengthen its connection with hotel owners. As a result, earlier this year, Oyo halted its expansion and laid off hundreds of staff throughout the world as countries around the world imposed lockdowns.
Agarwal told Bloomberg TV earlier this month that the epidemic hit the seven-year-old business like a “cyclone.” “We created something for so many years, and it just took 30 days for it to decrease by almost 60%,” he said, adding that the company has not decided whether or not to go public. Airbnb-backed According to Agarwal, Oyo had between $780 million and $800 million in the bank and has reduced its “monthly burn” across all companies to $4 million to $5 million. (In December 2020, the company had roughly $1 billion in the bank.)
Oyo said earlier this month that it has obtained $660 million in debt after Agarwal’s statements at the aforementioned conference. Another individual familiar with the situation told TechCrunch that the loan was utilized to pay off the previous obligation. Oyo stated in a filing on Wednesday that the debt’s term includes the option to exchange stock at a later date. If the agreement between the two companies goes through, it will be Microsoft’s latest investment in a company in India.
In the South Asian market, the company has funded several businesses, including news aggregation and short-video platform DailyHunt, e-commerce behemoth Flipkart, and logistics SaaS provider FarEye.