MICROSOFT INVESTS IN INDIA’S OYO AS SUPPORT AHEAD OF IPO
A source from this week’s regulatory filing has confirmed Microsoft’s investment in an Indian budget hotel chain – Oyo. It comes as the subject startup which is understood to be one of India’s most valuable startups due to challenges which affected its aggressive expansion to a good number of markets is faced with an issue of obvious concern.
It was reported that the OS and tech giant actually invested $5 million, an effort viewed as the company’s support which aimed at revamping the budget hotel chain company strategy. However, the latest investment practically positions Oyo’s values at $9.6 billion, which is slightly below its $10 billion margins and valuation during its financing round in 2019. However, according to a source familiar with the matter, it claimed that the company intends to file for an IPO later this year, while the latest investment which is considered strategic could see Oyo shifting to use Microsoft’s cloud services.
Meanwhile, the subject startup lost significant business to the pandemic, a huge concern for a company valued at $3 billion in recent quarters by one of its largest investors SoftBank. Prior to the pandemic, its core concern viewed as the company’s missteps were noted as toxic culture, lack of control in governance, and relationship with a good number of hotel owners which impacted its growth.
Base on this, it was noted that the company had pledged to improve relationships with hotel owners before the coronavirus and its trouble. Due to WHO and government guidelines, the startup was forced to lay off thousands of employees globally precisely earlier this year as countries across the globe enforced lockdowns in a bid to curb the virus spread while ensuring social distance adherence.
Prior to the OS and tech giant’s latest move (Microsoft invest), the startup’s CEO ‘Ritesh Agarwal’ during a press briefing with Bloomberg TV last month described the magnitude of the pandemic impact on the startup as a class of tropical storms like a “cyclone”. Noting that “we built something for so many years and it took just 30 days for it drop by over 60%” while adding that the subject firm is yet to make a decision on exploring the public markets.
According to someone familiar with the matter, it was noted that as of last month Oyo did raise $600 million in debt, equally one of Agarwal’s remarks during a virtual conference that was held recently. While the debt was used to pay off the previous debt. Consequently, Agarwal during the same virtual conference held lately made it clear that Airbnb-backed Oyo actually had in its bank funds in the region of $780 million to $800 million, and had pared its “monthly burn” across all business to $4million to $5 million.
More significantly, it will be fair to note that the subject firm had actually backed a good number of startups in the South Asian market, such as news aggregator and short-video platform DailyHunt, logistics SaaS firm FarEye, and e-commerce giant Flipkart. In view of this, should the deal between Oyo and Microsoft materialize! It should be considered as Microsoft’s latest investment in an Indian startup.
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