Microsoft Corp. In Talks To Invest In OYO Hotels And Homes

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Microsoft Corp. is in advanced talks to invest in Softbank-backed Oyo Hotels and Homes for an undisclosed amount, valuing the hospitality company at around $9 billion.

The development comes after Oyo founder and CEO Ritesh Agarwal said earlier this month that the company would consider a potential initial public offering (IPO). He, however, did not provide a timeline for the public offering.

 

Industry sources have confirmed Microsoft’s strategic investment in Oyo to multiple publications. A source told news agency Reuters that the deal could be announced in the coming weeks and would be a prelude to the IPO by Oyo.

Meanwhile, investment bankers said that Oyo could be looking at more marquee strategic investors ahead of its IPO. The daily also highlighted in its report that Microsoft will initially buy a small stake as part of the deal, but it will have the option to raise ownership later.

However, no official comment on the deal has come yet from either Oyo or Microsoft. It may be noted that Microsoft’s strategic investment comes after Oyo raised $660 million in term loan B (TLB) funding from global institutional investors earlier this month.

Currently, Oyo is backed by investors such as Softbank Vision Fund, Sequoia Capital, Lightspeed Ventures, Airbnb and Hero Enterprise.

Talks of Microsoft’s strategic investment in Oyo comes at a time when the entire hospitality sector is struggling due to the impact of the coronavirus pandemic. However, some initial signs of recovery have emerged due to easing restrictions.

The improving situation presents Oyo has a good opportunity of grabbing a larger market share and improving its business, given its digital presence. The funds raised from the IPO would also help the company expand its business further.