Oyo will raise $1.5 billion out of which Ritesh Agarwal, founder invests $700 million

Oyo Hotels and Homes are going to raise $1.5 billion from its chief executive and co-founder Ritesh Agarwal, SoftBank Group Corp. and some other investors for the expansion of the Indian lodging startup into the foreign markets including the U.S. and Europe.


The 25-year-old Chief Executive, Ritesh Agarwal is going to spend $700 million to buy new shares in the company as part of a $2 billion deal so as to triple his ownership stake. The existing investors of this budget hotel startup include  SoftBank’s Vision Fund, Lightspeed Venture Partners and Sequoia India who will be contributing the rest of the current round.

Ritesh Agarwal founded Oyo in the year 2013, has ended up building it into India’s second-most valuable startup along with a complete valuation of around $10 billion. Oyo's services include 1.2 million rooms in over 80 countries (590,000 rooms in China alone). It has finally entered the U.S. market earlier in 2019 and now Oyo has 7,500 rooms in around 60 cities in the U.S.


Mr. Ritesh Agarwal said in a statement that they believe that they will be able to build a growing global brand out of India and also ensuring it that the budget hotel business is run efficiently with a clear path plan to profitability.


He came in the news in July 2019 with his plans to spend around $2 billion to increase his stake in the company to 30% from 10% roughly. According to reports, the Japanese banks Mizuho Financial Group Inc. and Nomura Holdings Inc. are bankrolling Agarwal’s share acquisition of Oyo. He will be buying some of the shares from his existing investors Sequoia and Lightspeed, and will be carrying out this transaction through an entity called RA Hospitality Holdings, Oyo said in a statement.

Mr. Ujjwal Chaudhry said that the Oyo’s valuation is signaling to its scale and growth. Mr. Ujjwal Chaudhry is a Bangalore-based director at RedSeer Consulting services. "The quality of the experience may not be top-notch but it is still improving," he added.


This investment in Oyo by the Co-founder is being made at a time when its largest investor, SoftBank, is grappling with the failed initial public offering (IPO) of WeWork.


The $10 billion valuations have made Oyo India’s most valuable startup after One97 Communications, the parent company of digital payments bank Paytm. The E-commerce giant Flipkart Online Services Pvt has been acquired by Walmart Inc. in the year 2018 in a $16 billion deal. The valuations at companies: Oyo, Paytm and WeWork have been lifted by SoftBank's Investments.


Ritesh Agarwal had founded the startup when he was in his teens. He dropped out of college and roamed around India on a small budget. The expensive rates at hotels and guest houses he went to during his trip had inspired him to start this online service and the brand aims to provide travelers with experience at an affordable price.

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