In a major boost to the OYO's Chinese operations, China's Didi Chuxing is likely to invest in the company.
This would be the second such investment in an Indian startup after Ola, The Times of India reported. The proposed amount will be channelised to OYO's Chinese business, which was started in November last year and seen an exponential growth.
OYO, the hospitality service and budget hotel network was under the final stages of materialising a new $800 million- $1 billion financing round, which will eventually split its India and China operations for the purpose of finance.
It is to be noted that the investors are willing to infuse money on OYO's China-based operations only, with Didi and shared office start-up WeWork in the forefront.
The Times of India reported that OYO is under the process of raising $500 million for its India business under OYO global; on the other hand, its operation based out China is expected to raise another $500-600 million.
After the investments, the valuation of the domestic unit will be at $4.5 billion, while the Chinese operations will be diluting 50%, which is expected to snag a valuation of about $1.2 billion. Earlier, OYO China was 100 per cent subsidiary of the parent OYO global.
A person close to the matter told The Times of India "Didi and WeWork are routing their investments through OYO Global (the India business), but it is primarily for China. The overall funding could run up to $1.1 billion between the two countries.''
Softbank which has a 42 per cent stake in OYO is expected to see a similar shareholding in China subsidiary. Apart from Softbank, other existing investors including Sequoia Capital and Lightspeed Venture Partners are also supporting OYO China considerably. Its operation has grown exponentially with 1,000 hotels in a mix of franchised and leased properties running across China.
Most of the investors are looking to invest in the OYO's Chinese operation as it is in a better position to become more valuable. The branded hotel segment in China is untapped and is also a target for OYO.
