Oyo Rooms reportedly closes $250mn financing round led by SoftBank

Online hotel booking platform, OYO Rooms is reportedly closing a $250-million financing round led by its existing investor SoftBank.

The latest funding will be used to expand company's reach further and for growing new formats like OYO Townhouse for which the company is forging partnerships with property developers.

Though the startup's new valuation is $850 million, the size of OYO's latest funding round is half of the $500 million proposed by the Japanese Internet and telecom group earlier this year.

Citing three people familiar with the matter, the Economic Times report says, the latest fund-raise will give 42 percent ownership to SoftBank from the 27 percent it holds currently in the company.

The investment in OYO will come through the newly launched $100-billion SoftBank Vision Fund, which is eyeing opportunities in technology ventures globally. While SoftBank is expected to put about $225 million, the rest of the amount will come from the other existing investors.

The new valuation of around $850 million is a significant increase from its earlier valuation. Oyo was valued at $460 million when it last raised about $62 million capital in August 2016.

"Seeing what has played out at Snapdeal, many early investors are wary of SoftBank taking large ownerships in their portfolio companies. But OYO hasn't been able to shore up capital from external investors, which is why they have opted for half of what was committed by SoftBank," a source told ET.

Reportedly, while SoftBank was ready to give $500 million to the Ritesh Agarwal-led startup, other investors of the company opposed the move. It is not yet clear if other existing investors of the company are participating in this round or not.

The funds will also give a much-needed boost to the company’s plans for international expansion. Oyo Rooms has also started international expansion, beginning with Malaysia, and will now be looking at other international shores for further foray.