OYO rooms’ Chinese venture appears to have taken off well within a short span as indicated by the interest China’s Didi Chuxing has shown in the online hospitality player, according to a report in The Times Of India.
The funds, however, will be invested into Oyo China. OYO is reportedly looking to raise funds to the extent of $1.1 billion in this fresh round of which around $500 million would go to OYO China and the rest to OYO Global which includes the Indian side of the business.
This is Didi’s second bet in India after it invested in ride-hailing startup Ola.
Once these funds are in, OYO could get valued at around $4.5 billion, as per reports. On the China side a big chunk may be taken by the popular hail-ride firm Didi Chuxing and WeWork, a startup that deals with shared office space in China. The two Chinese firms may have limitations in making investments only within China and therefore this split-up has been necessitated. A 100% subsidiary will now stand diluted to 50% to accommodate this arrangement.
It is also reported at the same time that the largest investor, so far, in OYO, SoftBank of Japan is bringing in its funds too to keep its proportion of holding at almost the same levels as earlier, which is around 40-42%. It is being explained that SoftBank has a limitation that if its holding goes above 50%, then it has to buyout the rest of the stakeholders. Besides SoftBank, there are other investors like Sequoia Capital and Lightspeed Venture Partners who will also be willing to take appropriate positions in OYO’s China operations.
Coming to Oyo’s operations in China, OYO has signed up around 1000 properties in many Chinese cities in the tier 2 3 & 4 levels where the average room rent charged per night is around $20-25. The potential to grow further and to expand to higher segments like the branded hotels is also seen to be quite bright.