Hospitality unicorn Oyo’s valuation has nearly doubled in a year, hitting $10 billion between September 2018 and October 2019, despite major losses in the fiscal year ending March 31. The losses reportedly rose due to the increase in expenditures caused by the rapid expansion of the business in overseas markets. The company’s provisional net loss jumped from Rs 360.43 crore in the previous financial year to Rs 2,384.69 crore this year, according to a valuation expert’s unaudited financials.
“The numbers are based on a valuation report prepared by Oyo’s valuers (not auditors) that includes certain provisional financials for FY 19. It may be pointed out that the valuation parameters such as share prices are based on fair market value and are not reflective of the share premium price,” an Oyo spokesperson said in a statement.
“We would like to clarify again that these are not the final audited financials and the same will be issued later by the company along with the annual report that we issue every year and file with the RoC as well,” the spokesperson added.
But this did not reduce the increase in the company’s value funded by the Softbank Vision Fund of Japanese billionaire Masayoshi San. The big boost came from Oyo CEO Ritesh Agarwal’s $700 million investment through RA Hospitality Holdings (Cayman) in October this year.
In October, Oyo revealed it would raise $1.5 billion in the Series F funding round, with RA Hospitality Holdings infusing approximately $700 million as the company’s primary equity, complementing the balance of $800 million by other existing investors.
A significant portion of the funds will be redirected to its development plans on the U.S. market, and the company said in improving the role of the company in Europe’s vacation rental industry.
Oyo’s Valuation Leads to Failing of Co-Sharing Business
Earlier this year, India’s Competition Commission approved RA Hospitality Holdings to invest $2 billion in Oyo.
“In order to facilitate this transaction, Lightspeed Venture Partners and Sequoia, are selling part of their shareholding in Oyo to help the founder increase his stake while remaining invested and committed to the company’s long-term mission,” Oyo said.
In its last financing round, announced in September 2018, Oyo raised over $1 billion. It was led by SoftBank through the SoftBank Vision Fund. Along with the participation of existing investors, Lightspeed Venture Partners, Sequoia and Greenoaks Capital. It was also supported by new strategic partners such as Airbnb.
Oyo is active in more than eighty nations. According to the company, August 2019 saw year-over-year growth in revenue of “3.8x.”
The that losses of the company, however, prompt a contrast with the failing co-sharing business WeWork. It recently laid off 2,400 workers after its failed attempt to become public.
This long-anticipated layoff is the largest move by SoftBank Group Corp. It is a Japanese technology conglomerate. It provides a $9.5 billion lifeline and will soon own about 80 percent of WeWork’s shares.