New Delhi: In recent media reports, it has been revealed that H World Group, previously known as China Lodging, has successfully sold one crore equity shares in Oyo (Oravel Stays Limited) to a consortium of UAE-based family offices and institutional investors through a series of transactions. This equates to a 0.15 percent stock sale in H World Group on a fully diluted basis. Prior to this share sale, H World Group’s subsidiary owned 0.78 percent of Oyo, implying a significant dilution of its stake in the company as a result of the recent transactions. These deals were executed in multiple tranches predominantly throughout 2022, enabling H World Group to amass over Rs 75 crore in proceeds.
H World Group’s partial divestment has yielded an impressive 500 percent return on the share sale, leaving the company with a remaining stake valued at more than Rs 300 crore. This implies a valuation of USD 6.6 billion for Oyo, a prominent player in the hotel tech industry that has been striving to go public on Indian stock exchanges.
However, it is worth noting that the most recent secondary market transaction involving Oyo’s equity shares occurred in October of the previous year when selected family offices acquired the company’s shares at the same valuation of USD 6.6 billion. This indicates that despite achieving notable business success, Oyo’s valuation has remained unchanged in an environment of heightened scrutiny surrounding startup valuation multiples.
Following this transaction, H World Group will possess a 0.63 percent stake in Oyo. H World Group, listed on the Nasdaq exchange, initially invested USD 10 million to acquire shares in Oyo back in 2017, when the company was valued at USD 850-900 million. This investment was part of a larger funding round of USD 250 million led by the SoftBank Vision Fund.
Moody’s Investors Service recently released a report stating its expectation that Oyo will achieve EBITDA profitability by FY24. According to Moody’s projections, Oyo is anticipated to generate EBITDA ranging between USD 50 million and USD 55 million in FY24. These figures indicate a positive outlook for Oyo’s financial performance and reinforce its potential for sustained growth in the future.
