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Indian hotel-booking startup Oyo raises $1bn led by Softbank

Japanese group pours $800m into India’s market leader headed by college dropout

Oyo has emerged the market leader India with more than 125,000 rooms as it sought to streamline room bookings in the country’s disorganized lodgings market.   © Reuters

MUMBAI (NewsRise) -- Indian hotel-booking startup Oyo Hotels is raising as much as $1 billion from investors led by Japan's SoftBank Group, underscoring the growing investor interest in the country's startups.

Oyo, founded by Ritesh Agarwal, a college dropout, raised $800 million in the latest round from SoftBank Investment Advisers and existing investors Lightspeed Venture Partners, Sequoia Capital, and Greenoaks Capital, the company said in a statement. It also received investment commitment for an additional $200 million, it said.

The company, which runs a network of hotel rooms, plans to invest $600 million in China, where it began operations less than a year ago and has since expanded into more than 170 cities with 87,000 rooms. The remaining funds will be used to fortify its dominant position at home as well as gain a global footprint, Oyo said.

Oyo has emerged the market leader India with more than 125,000 rooms as it sought to streamline room bookings in the country's disorganized lodgings market. Over the past 12 months Oyo has also expanded into new markets in Britain, Malaysia, and Nepal.

"With this additional funding, we plan to rapidly scale our business in these countries, while continuing to invest further in technology and talent," said Agarwal, who is also the chief executive of Oyo. "We will also deploy fresh capital to take our unique model that enables small hotel owners to create quality living spaces, global."

Oyo's latest fundraising reportedly values the startup at $5 billion, behind India's most valuable startup One97 Communications that owns digital payments service Paytm. According to a recent Mint report, Paytm is currently valued anywhere between $10 billion and $12 billion.

The investment in Oyo comes at a time when deep-pocketed investors are placing lucrative bets on the mature industry leaders amid hopes of extraordinary returns, say analysts.

"This is the year when investors are backing those companies that have scaled up their businesses and have emerged as clear leaders," said Satish Meena, an analyst at Forrester Research. "What they are getting now is the growth capital, compared with scraps of funding to test new ideas."

Some investors have made a windfall from Indian internet startups. Recently, Walmart acquired a majority stake in India's largest e-commerce company Flipkart Internet for $16 billion. The deal saw many of Flipkart's long-term investors such as SoftBank, Tiger Global Management, and Accel Partners cashing out.

Last month, billionaire Warren Buffett's Berkshire Hathaway made its first investment in India through a fund infusion into One97 Communications. In June, Swiggy raised $210 million from South Africa's Naspers and Hong Kong-based fund DST Global in a deal that valued the food delivery company at $1 billion.

Earlier in the year, food listings startup Zomato raised $150 million from the payments unit of China's Alibaba Group Holding at a billion-dollar valuation.

According to media reports, Ola, India's largest ride-hailing service is in talks with Naspers and a host of other investors to raise $1 billion in a deal that could double its valuation to as much as $8 billion. In October, Ola raised $1.1 billion from SoftBank and China's Tencent Holdings and had then said it would raise an additional $1 billion.

--Dhanya Ann Thoppil

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