Hospitality unicorn Oyo has secured $50 million in funding from InCred Wealth and Investment, marking its first significant capital infusion in nearly three years. However, the investment values the Gurugram-based company at $2.38 billion, a substantial 76% decrease from its peak valuation of $10 billion.
According to regulatory filings, Oyo’s board approved the issuance of new shares to InCred, granting the investor a 2.11% stake in the company post-investment.
This funding is part of a broader $100-million round Oyo aims to raise from family offices and high-net-worth individuals before refiling its draft prospectus for an initial public offering (IPO). In May, Oyo withdrew its IPO application for the second time, citing unfavourable market conditions.
Oyo plans to utilise the fresh capital for growth initiatives, global expansion and potential acquisitions. The company recently reported its first annual net profit of approximately $12 million for FY24, showcasing an improved financial performance.
Sources close to the matter revealed that Oyo’s adjusted Ebitda reached $107 million in FY24, a significant increase from $33 million in FY23. The company’s gross margins also improved to $302 million in FY24, up from $283 million in the previous fiscal.
In FY24, Oyo expanded its portfolio by adding 5,000 hotels and 6,000 homes globally. The gross booking value per storefront per month for hotels stood at $4,000. Additionally, the company’s operating costs decreased from 19% of gross booking value in FY23 to 14% in FY24.
Despite the valuation haircut, Oyo’s financial outlook appears to be improving. In June, Fitch Ratings upgraded the company’s credit rating, citing a strengthened financial profile. The latest funding round and improved metrics could potentially pave the way for Oyo’s renewed IPO efforts in the near future.
The company is also looking to refinance a $450-million loan repayment and raise additional funds through a fresh issue of shares.