Less than three months after hospitality company OYO Hotels & Homes raised $1 billion from SoftBank, Sequoia and other existing investors to enter unicorn club, it is reportedly working on another $1 billion funding round.
Singapore-based ride-hailing company Grab -- hailed as Southeast Asia's most valuable startup -- is in advanced discussions to invest $100 million (Rs 697.7 crore) in the Ritesh Agarwal company, The Economic Times reported.
Sources told the daily that Grab, which like OYO is a part of SoftBank's portfolio, is expected to close the deal over the next few days. The proposed investment will be made through A1 Holdings Inc., an entity controlled by Grab, which was valued at $11 billion at the close of its funding round in August. If things go to plan, OYO will be its first India bet.
The ride-hailing giant's interest in the Gurugram-based hospitality chain is not surprising. In September, its co-founder Hooi Ling Tan told Bloomberg that Grab has been expanding rapidly throughout Southeast Asia to leverage its size after the Uber deal -- in March it had acquired Uber's Southeast Asia operation -- and was exploring forays into fields as diverse as grocery delivery and finance to healthcare.
The company is also flushed with funds to bankroll its plans. Having already raised $2 billion in the calendar year so far, Grab is reportedly on track to raise another $1 billion before 2019 rolls in. It already has an existing venture investment arm, Grab Ventures, which has made four investments so far, according to its website.
Besides, Grab and OYO have one common interest: Tapping Indonesia. Both companies have identified Indonesia as a key market for growth. According to Tan, Grab's boasts a 65 per cent share in the Indonesian ride-hailing market -- amid intensifying rivalry with Jakarta-based ride-hailing and logistics startup Go-Jek -- and has seen its revenue in this market triple so far this year.
Meanwhile, OYO, which announced the launch of its operations in Indonesia last October, is looking to expand to the top 35 cities in the country, including Yogyakarta, Bandung and Bali, over the next 15 months. It had commenced its Indonesian operations with 30 full-inventory franchised and operated exclusive hotels and over 1,000 rooms in just three cities, namely Jakarta, Surabaya and Palembang.
"Indonesia is one of the top choices for both global and Indian travelers and with our market learnings and expertise we are ready to tap this opportunity," Agarwal had told the daily at the time, adding "We intend to invest over $100 million in this high growth market."
Grab's proposed investment fits in neatly with these plans. The daily added that the talks with the Singapore-based startup are a part of OYO's $1 billion funding round. However, the Grab's entry as a stakeholder is not expected to impact OYO's valuations. The investment would reportedly be at the same valuation -- $5 billion -- that the hospitality chain commanded in its last funding round in September.
If the Grab deal goes through, OYO would have raised $900 million in equity financing, with the final tranche of $100 million expected by the end of the year.
Edited by Sushmita Agarwal