Chinese internet giant Tencent Holdings has held discussions with OYO Rooms, an Indian budget hotel network, over a potential investment, according to an Indian media report.
The Times of India reported on Tuesday, citing sources, that Tencent was in talks to lead a financing round of up to US$500 million in OYO Rooms.
The investment could value OYO Rooms at over US$2 billion, which is more than double the US$850 million valuation that the Indian firm fetched during a previous financing round last year.
OYO aims to grow its China business with the new financing round, according to the Indian newspaper, which said the startup has also held discussions with other Chinese firms, as well as some financial entities, apart from Tencent.
“The company is engaged with Tencent, and a term sheet is likely. There are a bunch of other investors also in talks, but those are preliminary at the moment. The fundraising is largely to grow the China business,” a source was quoted as saying.
As the leading budget-hotel brand and booking platform in India, OYO partners with budget hotels, including guesthouses and low ranking hotels, and standardizes their rooms and services under OYO’s brand name.
It also launched OYO Home last year, an Airbnb-like marketplace for short-term rentals.
Founded in 2013 by then-teenager Ritesh Agarwal, the company now has operations in India, Malaysia, UAE, Nepal, Indonesia, and is eyeing expansion into the UK and European markets.
It entered the China market in November 2017, operating in 26 cities across the country with over 11,000 rooms. China is said to account for about 90 percent of OYO’s overseas market revenues.
The Indian startup has raised US$450 million in capital to date, according to Crunchbase.
Last year, OYO raised a US$250 million series D round led by SoftBank Group through the Vision Fund. The Japanese firm is currently OYO’s largest shareholder with a 42 percent stake.
Sequoia Capital and China’s Lightspeed Venture Partners are among the other investors.
Nasdaq-listed Chinese hotel management company Huazhu Hotels, which was previously known as China Lodgings, also came on board with a US$10 million strategic investment last September.
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