Microsoft to invest in OYO for an undisclosed amount at $9 Bn valuation ahead of IPO: Report

Tech giant Microsoft is in advanced talks to invest in Indian hospitality firm OYO at a valuation of $9 billion. OYO, in 2019, had a valuation of $10 Billion, making it one of India's largest valued startups. According to a TechCrunch report citing sources, a deal may close soon. It also mentioned that the companies have not clarified the size of the investment. Currently, OYO counts Airbnb, Didi Chuxing, and Grab as its strategic investors. The Microsoft deal may also involve the hotel aggregator to shift onto Microsoft's cloud services, the report mentioned.

The report also suggested that this would mark Microsoft's another strategic investment in Indian startups after DailyHunt, Flipkart, and FarEye. Another ET report suggested technology major will initially buy a small stake, but it has the option to raise ownership later. OYO may announce the deal in the coming weeks, Reuters reported, which would overture its IPO plans. Founder and Chief Executive Officer Ritesh Agarwal said earlier this month that the company would consider a potential public offering, but did not provide a timeline.

Recent fundraise

OYO has been looking to ramp up its product line in the hospitality industry including coworking spaces, staycation rooms, etc. In July, the company announced its Term Loan B (TLB) funding of $660 million from global institutional investors. It aims to utilize these funds to retire its past debts, strengthen the balance sheet and other business purposes including investment in product technology, it said. "We are delighted by the response to OYO's maiden TLB capital raise that was oversubscribed by leading global institutional investors. We are thankful for the trust that they have placed in OYO's mission of creating value for owners and operators of hotels and homes across the globe," said Abhishek Gupta, Group Chief Financial Officer, OYO.

The hotel aggregator counts the SoftBank Group as its largest investor with a 46% stake. It endured months of layoffs, cost cuts, and losses since the COVID-19 pandemic outbreak last year. OYO is back on the track as the Covid-like restrictions opening up in various parts of the world, including India; the company aggregates bookings for budget hotels around the world.