Microsoft Corp. has invested in Softbank-backed Oravel Stays Pvt., the operator of OYO-branded hotels that's planning to go public.
OYO board has approved the issue of equity shares and convertible preference shares amounting to $4.97 million (around Rs 37 crore) to Microsoft in a private placement, according to filings with the registrar of companies and reviewed by BloombergQuint.
OYO has issued 5 equity and 80 preference shares, taking its total outstanding shares to 1, 46,634. Microsoft holds 0.052% in OYO following the investment.
The firm raised the fresh investment at an issue price of $58,490 per share (Rs 0.43 crore). According to BloombergQuint's calculation, that values the hotel aggregator at $8.5 billion, a tad lower than its January fundraise. OYO had raised Rs 54 crore from Hindustan Media Ventures Ltd. at a valuation of $8.6 billion (Rs 64,241 crore).
Last year, OYO had raised nearly $806 million (Rs 5,750 crore) from Softbank Vision Fund, and RA Hospitality, owned by founder Ritesh Agarwal, at a $7.8-billion valuation.
The company said the fresh investment will be used for general corporate purpose and other business-related activities, including, supporting the growth, global expansion and acquisitions.
The deal could also involve the company shifting to use Microsoft's cloud service, one executive told BloombergQuint requesting anonymity as details are private. Microsoft is expected to pour more money as part of a larger round, the person said.
The fundraise comes when the lodging giant has started work on its draft prospectus that it plans to file in October, Bloomberg reported earlier this week.
OYO, 46% owned by Softbank, is one of the worst impacted startups by the pandemic as people stopped travelling. Its ambitious global expansion and aggressive targets were also hammered by the Covid-led disruption. Last year, the company laid off thousands of employees in China and India, and also slashed compensation to lower costs.
Earlier this year, it secured a $660-million debt financing from global investors to service existing loans.
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