Entrepreneurship studio logo

Entrepreneurship Studio

Oyo•

Funding

OYO Secures ₹550 Crore Investment from Founder Ritesh Agarwal's Redsprig Innovation

A smiling man, identified as Ritesh Aggarwal, founder of OYO, is wearing a striped shirt and centered against a pastel purple background, with the text "OYO" repeated in bold pink letters as a backdrop.
By
E-Studio
2 min read

Hospitality giant OYO has raised ₹550 crore (approximately $65 million) from Redsprig Innovation Partners, an entity led by its founder and CEO, Ritesh Agarwal. This funding represents a strategic move to further strengthen the company's market position and fuel its growth initiatives.

Details of the Investment

The transaction involved OYO's board approving a special resolution to issue 12.91 crore equity shares at ₹42.6 per share. This capital infusion increases OYO's valuation to $3.79 billion, reflecting a 59.2% rise from its previous valuation of $2.38 billion during the Series G funding round. The investment results in a 1.728% dilution of the company's total equity.

This marks Agarwal's second major capital infusion into OYO in recent years. In 2024, he led a $175 million round through his Singapore-based fund, Patient Capital.

Strategic Utilization of Funds

The newly acquired capital is intended for several key initiatives, including:

  • Global Expansion: Accelerating international growth and pursuing acquisitions.
  • Business Strategy: Refining operational strategies to improve market competitiveness.
  • Corporate Objectives: Advancing broader corporate goals to sustain long-term growth.

Financial Performance

OYO has been focusing on profitability and operational efficiency. In FY24, the company reported:

  • Revenue: ₹5,389 crore, a slight decline from ₹5,464 crore in FY23.
  • Expense Reduction: A 16% decrease in expenditures, leading to improved margins.
  • Net Profit After Tax (PAT): ₹230 crore, signaling a strong turnaround from previous losses.

IPO Developments

Earlier this year, OYO withdrew its draft red herring prospectus (DRHP) for the second time, citing unfavorable market conditions. The company intends to refile its IPO documents after completing significant funding rounds, including this latest infusion.

Our Opinion on the News

Ritesh Agarwal's decision to lead this funding highlights his strong belief in OYO's strategic direction and growth potential. The significant increase in valuation following this investment sends a positive signal to the market and existing stakeholders.

OYO's ability to reduce expenses and achieve profitability showcases disciplined financial management, a crucial factor for building investor confidence ahead of its anticipated IPO. Furthermore, the focus on global expansion and strategic refinement positions the company well against competitors in the dynamic hospitality sector.

This funding not only underscores Agarwal's commitment to OYO's success but also sets the stage for the company to capitalize on emerging opportunities in the global hospitality market.


Source: ISN