Indian hospitality giant Oyo has raised USD 100 million from Chinese ride-hailing giant Didi Chuxing to take the former's total investment tab to USD 1 billion.
Japan's Soft Bank has invested USD 800 million in exchange for 42% stake in the company.
According to an Economic Times report, the deal has been made through Star Virtue Investment, a Didi-controlled entity. The company had raised USD 900 million until December last year, pending 100 million to close a USD 1 billion round anticipated in Oyo’s RoC filings. Didi’s infusion solidifies the company’s USD 5 billion valuation.
OYO entered China in November 2017 and made the official announcement in June 2018. The company had also attracted an investment of USD 10 million from China Lodging Group in September last year.
Oyo and Didi had worked together for a marketing campaign during the former’s launch in China with the slogan “Ride comfortably with Didi, stay comfortably with OYO”. OYO’s China spokesperson, however, denied any strategic investment plans back then.
Chinese government has come down hard on Didi over passenger security concerns, putting the firm's taxi-hailing business on the back foot.
Didi is now fast diversifying in the face of government heat. Didi has hived off a third of its fledgling food delivery team for the development of a hotel business line since September.
Founded by Ritesh Agarwal in 2013, Oyo has 125,000 rooms listed in India. The bookings have grown from 6 million in December 2016 to 13 million in December 2017 to 75 million by December 2018 at a 6x growth rate year on year, the company claimed.
In 2018, Oyo recorded revenue of Rs 416 crore, up from Rs 120 crore from the year ago.
“We still believe that this is just the beginning and there's a long way ahead of us. We will continue to maintain this momentum while redefining hospitality experience for people around the world. We aspire to be the largest hotel chain, Abhishek Gupta, Chief Financial Officer, OYO Hotels & Homes said in a press statement.
Analysts The Passage spoke to said it makes sense for the hotel brand to raise capital in China to compete with local players including Meituan-Dianping, Ctrip, Qunar, Tongcheng-Elong, Figgy among others.
Didi and Meituan are foraying into different verticals to gain market share in the world's largest internet economy. Both the companies are backed by Chinese conglomerate Tencent Holdings (腾讯). Tencent holds 11.4% stakes in Didi, and 20% in Meituan.
Apart from India, OYO has presence in Malaysia, Nepal, China, and recently Japan. The company is aggressively pushing to expand its footprint in Southeast Asia and Europe.