Microsoft to buy stake in Oyo at $9 billion valuation

NEW DELHI: US tech giant Microsoft is set to acquire a strategic stake in homegrown hotel chain Oyo before its proposed initial public offering (IPO). The deal, set to be announced soon, values the SoftBank-backed startup at around $9 billion, sources said. Oyo, which had become the world’s second-largest hotel chain in 2019 before the pandemic, did not comment on the development.Microsoft, too, did not reply to an email from TOI.
The budget hotels startup, led by 27-year-old Ritesh Agarwal, however, closed a $660-million debt financing round earlier this month from global institutional investors with plans to use the capital to reduce part of its existing debt and bolster its tech capabilities. Along with the entire hospitality industry, Oyo’s operations have been battered by pandemic-related travel restrictions. Agarwal, who counts investors including Sequoia Capital, Lightspeed Ventures and Airbnb as his backers, had said during the pandemic that the startup has around $1 billion in the bank.
Oyo’s valuation had soared to $10 billion in 2019 from $850 million in 2017 before being downgraded by investors on the back of brewing trouble overseas and home market. Industry experts, too, remained skeptical of rapid expansion.