OYO’s rival FabHotels raise Rs 54 crores from Goldman Sachs, Accel Partners, Qualcomm

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Updated: June 3, 2019 8:49:35 PM

FabHotels has raised Rs 54 crore ($7.7 million) from existing investors Goldman Sachs, Accel Partners, and Qualcomm on private placement basis in a Series B1 round.

FabHotels was launched in 2014 by FabFurnish (acquired by Future Group’s Kishore Biyani in 2016) co-founder Vaibhav Aggarwal. (Image: fabhotels.com)

Hotel and home chain OYO’s smaller rival FabHotels has raised Rs 54 crore ($7.7 million) from existing investors Goldman Sachs, Accel Partners, and Qualcomm on private placement basis in a Series B1 round.

FabHotels has issued 8,595 compulsorily convertible preference shares to Qualcomm Asia Pacific, Accel India IV, and Goldman Sachs’ Global Private Opportunities Partners II, and Global Private Opportunities Partners II Offshore Holdings funds, said regulatory filings sourced by business signals platform Paper.vc.

The current investment is the part of $25 million Series B round raised in July 2017, a company spokesperson told Financial Express Online.

FabHotels was launched in 2014 by FabFurnish (acquired by Future Group’s Kishore Biyani in 2016) co-founder Vaibhav Aggarwal and competes against budget hotel chain Treebo and category leader OYO that is India’s largest and China’s second largest hotel chain in room count. OYO has over 176,000 rooms in India and 450,000 rooms in China.

India’s online hotel booking market has a significant pie of the online travel market that has revenues worth $8 billion in 2019 and is expected to grow to $11.7 billion by 2023. In terms of the value of online hotel bookings, the market will grow to a size of $4 billion in 2020, up from $1.2 billion in 2015, as per statistics portal Statista.

“OYO’s focus on China appears to have created some mind space in the eyes of investors reviewing the Indian market opportunity,” Vivek Durai, Founder, Paper.vc told Financial Express Online.

Post-fundraising, Aggarwal’s shareholding in the company stands at 19.61 per cent apart from Accel’s 24.12 per cent (biggest shareholder), 10.96 per cent stake by Qualcomm, 12.05 per cent by Partners II fund, and 13.07 per cent by Partners II Offshore holdings among its biggest stakeholders, the filing showed.

The total amount raised by Treebo and FabHotels stood at $92.3 (excluding latter’s latest round) vis-a-vis OYO’s mammoth $1.7 billion funding so far, as per deals tracker Crunchbase.

In comparison to OYO, Treebo and FabHotels each have over 10,000 rooms, as per their websites. Comments from Aggarwal will be updated as and when received.

“It is going to be extremely difficult for Treebo or FabHotels to compete with OYO and build a brand against them with the money and aggression they have in the market,” Navneet Nagpal, Principal Consultant and Founder at hospitality consulting firm Spectra Hospitality had told Financial Express Online.

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