India Oyo Hotels seeks to raise $ 600 million in debt to bolster its finances, person familiar with the matter says after new coronavirus outbreak decimated travel demand and hampered company recovery efforts .
Oyo’s board of directors, or Oravel Stays Pvt, as the parent company is officially called, approved an institutional term loan plan in meetings on Wednesday and Thursday, the person said, asking not to be named. because the agreement was not made public. .
Oyo is one of the largest startups in Softbank Group Corp.’s portfolio and its meteoric global expansion has been supported and encouraged by the billionaire founder of the investor, Masayoshi Son. While the start-up was recently valued at $ 10 billion, its business was crushed after the rapid spread of the travel virus, just as operational missteps have marred partnerships with hotel owners.
As recently as March, founder Ritesh Agarwal told employees that Oyo’s business in India was growing and the company was making the same dollars in gross profit in January 2021 as a year earlier, before to be affected for the first time by the virus. But the pandemic has since intensified in India, leaving tens of millions of people infected and erasing hopes of a rebound in tourism and travel.
Oyo’s loan, also known as a B-term loan or TLB, is open to institutional investors for two weeks with an application deadline of June 2, the person said. Oyo is organizing an appeal to lenders on May 21 and JPMorgan Chase & Co. is arranging the deal, the person said.
The high-profile start-up, the first Indian unicorn to seek debt from foreign institutional investors, is aiming for a five-year loan. The issuer of the loan will be the Singaporean entity of Oyo, the person said. Its entities in the Netherlands and the United Kingdom could also act as borrowers. A representative from Oyo declined to comment.
Oyo’s goal is to borrow at a lower interest rate to service its existing higher interest rate loans. Competitively priced capital is plentiful, with around 20 top startups, from Grab Holdings Inc. to DiDi Chuxing and Airbnb Inc., tapping institutional loans to support balance sheets.
Oyo has raised venture capital from investors such as SoftBank, Greenoaks Capital and Lightspeed India. Its latest assessment places it third among India’s most valuable startups, behind educational technology provider Byju’s and digital payment company Paytm.
Indian start-up Oyo raises $ 1.5 billion to a value of $ 10 billion
To reduce costs, the startup closed its activities in several markets and laid off or laid off thousands of employees. It still works with over 100,000 small hospitality and home entrepreneurs who own and operate homes with Oyo technology designed to increase room yields.
To improve efficiency, Oyo streamlined its global operations into three groups: India and Southeast Asia, Europe and Oyo International. In December, Agarwal reportedly told employees the start-up was progressing towards a rebound and had around $ 1 billion to fund operations until it went public.