Oyo Seeks Investment from Family Offices Amid Valuation Cut
- ByStartupStory | May 22, 2024
Hospitality start-up Oyo, backed by SoftBank, is in talks to raise $80-90 million from family offices, according to a report by The Arc. The company is collaborating with InCred, a financial services firm, to secure this investment, with commitments starting at $2 million each.
Family offices, private wealth management advisory firms catering to ultra-high-net-worth individuals (HNWIs), offer comprehensive financial and investment management services, setting them apart from standard wealth management businesses. Oyo’s strategic move to involve family offices highlights its effort to tap into the private wealth sector for growth capital.
A call arranged by InCred featured Oyo’s CEO and founder, Ritesh Agarwal, engaging with nearly 100 potential investors. The report indicates that the majority of the raised capital will be allocated towards expanding Oyo’s business operations, while a portion will be used to reduce the company’s debt burden.
Additionally, Oyo aims to raise half of its target $150 million from a sovereign fund, though specific details remain undisclosed. Earlier this year, Bloomberg reported that Malaysia’s sovereign wealth fund, Khazanah Nasional Berhad, was in discussions to lead a $400 million fundraising round for Oyo.
The current fundraising efforts are based on a valuation of $2.3 billion, a significant decrease from Oyo’s peak valuation of $10 billion in 2019. In 2022, SoftBank had already adjusted Oyo’s valuation to $2.7 billion. Despite these valuation cuts, Oyo remains optimistic, emphasizing that the focus on refinancing its outstanding debt will enhance the company’s profitability.
Oyo has retracted its initial public offering (IPO) plans but is expected to refile once its refinancing strategy is in place. The company aims to raise up to $450 million through the issuance of dollar bonds, a move anticipated to strengthen its financial position.
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