Headquartered in India, Oyo Hotels & Homes has sealed a debt financing round of US$660 million from multiple leading institutional investors to service existing term loans and other business investments as the country still grapples with the pandemic. According to peoples’ awareness, the company’s purpose is to recover from the disturbance caused by the pandemic’s second wave.

The company prefered to keep the names of the investors undisclosed. It did, however, said Wall Street investors such as Fidelity, Varde Partners and Citadel Capital Management have subscribed to Oyo’s term loan B (TLB), oversubscribing by 1.7 times and with total involvement of about $1 billion from leading institutional investors.

The terms of the deal include, Oyo has to repay principal loan value after six years while meeting the interest at regular periods. OYO stated the agreement was “upsized and raised by 10 per cent to US$ 660 million, the company’s fundamentals returned strong interest from fundraisers despite the virus surge.”

As stated by the group chief financial officer, Oyo, Abhishek Gupta, the capital will be used to scrap the company’s prior debts, strengthen the balance sheet and other marketing purposes, including investment in product technology. 

JP Morgan, Deutsche Bank, and Mizuho Securities are the lead arrangers for this financing, he continued.

Covid’s Impact

The company professes to be having above 100,000 hotel partners across 80 countries. Even though the bookings are steadily picking up as lockdown restrictions are elevated in the country, the newest round comes when the hospitality industry in India is still to recover from the shock of Covid-19 fully. A likely third wave of the pandemic could disorder the sector again, due to which the market remains uncertain.

The organisation had to trim operations such as the US and China. Even in India, it had to cut down its workforce significantly to shorten spending whilst pandemic impacts gross bookings.

What the CEO has to say

Founder Ritesh Agarwal said at a recent event that Oyo still has cash of about $800 million in the bank and that its cyclic burn is in the range of $4-5 million over industries, 43% of its revenue issues from India and Southeast Asia, while 28% emanates from Europe and other global exchanges.

Oyo Group Chief Financial Officer Abhishek Gupta said, reflecting on the fundraising, “We are amused by the response to Oyo’s maiden TLB capital raise that supervising global institutional investors oversubscribed. We are grateful for the confidence they have placed in Oyo’s mission of creating value for owners and administrators of hotels. This is a testament to the force and success of Oyo’s commodities at scale, our solid fundamentals and our high-value potential.”

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