Khazanah in talks to lead Oyo Hotel’s $400 million fund raise

Oyo Hotels & Homes, the once-high-flying Indian hotel-booking platform, is looking to Malaysian wealth giant Khazanah Nasional Berhad for a $400 million cash injection, aiming to fuel expansion and chip away at its debt.

This potential investment, revealed by sources familiar with the matter, comes after Oyo's turbulent trajectory in recent years. The SoftBank-backed startup, once valued at close to $10 billion, scaled back its planned IPO in March amid market uncertainties. While travel has rebounded from its pandemic lows, Oyo's IPO timeline remains unclear.

The $400 million deal with Khazanah, known for its active investments in India, would offer a much-needed boost. However, sources caution that talks are still ongoing and the Malaysian fund could withdraw. Other investors are also in the picture, aiming to contribute to Oyo's potential resurgence.

Despite the positive news, Oyo's financial reality remains challenging. The company reported a net loss of $156 million for the year ending March 2023.

Khazanah in Talks to Lead Investment:  Malaysia's sovereign wealth fund, Khazanah Nasional Berhad, is in discussions to lead a $400 million funding round in Oyo Hotels & Homes. This potential investment could provide a much-needed boost for the Indian hospitality company.

Funds for Expansion and Debt Reduction:  Oyo is seeking to raise funds for both expansion and debt reduction. The company has been expanding aggressively in recent years, both organically and through acquisitions. However, it has also accumulated a significant amount of debt.

Second IPO Attempt:  Oyo previously filed for an IPO in 2021, but had to withdraw it due to poor market conditions. The company then re-filed for an IPO in March 2023, after significantly reducing the target amount. However, a final decision on the IPO timing has not yet been made.

Talks Ongoing with Other Investors:  While Khazanah is in advanced talks, Oyo is also holding discussions with other potential investors for the funding round. This suggests that there is significant interest in the company, despite its recent challenges.

Travel Market Recovery and Future Outlook: The travel market has improved significantly since the pandemic lows, but Oyo has not yet returned to profitability. The company reported a net loss of $156 million in the year ending March 2023. Oyo's future success will depend on its ability to control costs, improve its profitability, and navigate the competitive Indian hospitality market.