Oyo Rooms
Oyo RoomsPhoto credits: Reuters

Oyo Hotels & Homes is raising $1.5 billion from its founder Ritesh Agarwal and other investors led by SoftBank. The latest round of funding will spur the company's valuation more than $ 10 billion within a short span of 6 years since its inception.

Out of a total $1.5 billion, Agarwal's RA Hospitality Holdings will infuse around $700 million and the rest will be contributed by existing investors. The funds will be used to expand Oyo's business in the United States, its fastest-growing market and strengthen its vacation rentals business in Europe. Notably, the fundraising is the largest for an Indian unicorn since SoftBank invested $2.5 billion in Flipkart in 2017.

Agarwal, founder, and CEO (global), Oyo, said, "On a year-on-year basis, we have seen that not only are we operating profitably at the building level but at the same time our Ebitda (earnings before interest, tax, depreciation and amortisation) has also improved by 50 per cent. The losses as a percentage of NRV have also been on a steady and significant declining curve."

He further went on to add, "Our immediate goal is to make forward-looking investments so we can achieve our mission while delivering on our fiduciary responsibility to our investors by building a sustainable business."

Ritesh Agarwal
OYO Rooms founder Ritesh Agarwal

As per a report in Business Standard, Aggarwal's latest round of fund infusion will be a part of the $2-billion plan to increase his ownership stake in the company by 3 times.Lightspeed Venture Partners and Sequoia are the fund houses that are selling their stakes in Oyo to allow Agarwal to increase his stake.

Last year in September, Oyo had raised more than $ 1 billion with participation from SoftBank, Lightspeed Venture Partners, Sequoia, and Greenoaks Capital, and new strategic partners like Airbnb.

In recent, Oyo is aggressively expanding its business globally with its footprints increasing from South-east Asia to Europe. Moreover, the company has also gone through major restructuring setting up several subsidiaries and bifurcating operations globally.

Agarwal has changed his position from executive director to a non-executive director in Oyo's India operation. The new role would be for one of the country's youngest to be the founder of a unicorn start-up to take up a more active role in the global operations of Oravel Stays Singapore.