OYO has obtained a term loan B (TLB) funding of $660 million from global institutional investors. The offer was oversubscribed by 1.7 times, and the company received close to $1 billion in commitments from leading institutional investors.
This is billed as a landmark transaction because OYO is the first Indian company to raise capital via the TLB route. The lead arrangers for this financing were JP Morgan, Deutsche Bank, and Mizuho Securities.
Commenting on the financing, Abhishek Gupta, Group Chief Financial Officer, OYO, said “We are delighted by the response to OYO’s maiden TLB capital raise that was oversubscribed by leading global institutional investors. We are thankful for the trust that they have placed in OYO’s mission of creating value for owners and operators of hotels and homes across the globe.”
“This is a testament to the strength and success of OYO’s products at scale, our strong fundamentals, and our high-value potential. OYO is well-capitalized and on the path to achieving profitability. Our two largest markets have demonstrated profitability at the slightest signs of industry recovery from the COVID-19 pandemic”, he added.
The company closed the $600 million capital raise at an Initial Price Guidance of L+ 850 basis points, which was lowered by 25 basis points on May 20.
Despite increased interest from marquee investors in the midst of the pandemic, OYO increased the deal size by 10% to $660 million.
The interest margin rate was reduced from the Initial Pricing Guidance to LIBOR+825 basis points by 25 basis points. The funds will be used to pay off past debts, strengthen the balance sheet, and for other business purposes such as product technology investment.
OYO is a global platform that empowers entrepreneurs and small businesses with hotels and homes by providing full-stack technology that increases earnings and simplifies operations, bringing easy-to-book, affordable, and trusted accommodation to guests around the world, including India, Europe, Southeast Asia, and the United States, with a presence in over 80 countries.
It is the first Indian startup to be publicly rated by Moody’s and Fitch, two of the world’s leading rating agencies. Fitch and Moody’s assigned ratings of B and B3 (stable outlook) to OYO’s senior secured loan, respectively, based on the company’s sound business model and resilient financial profile with significant potential upside.
Dr. W. Steve Albrecht, a member of OYO’s Board of Directors and Chairman of the Audit Committee, commented, “As a part of OYO’s board, it’s heartening for me to see the strong interest from the investor community in the company, leading OYO to become the first Indian startup to be independently assessed by the world’s leading credit rating agencies – Moody’s and Fitch. Today, OYO has 100K+ partners globally who are running successful businesses by utilizing OYO’s proprietary technology, products, and revenue management capabilities for delivering trusted accommodations for guests.”
OYO delivers a suite of technology products that drive an immediate and sustained increase in revenue and profits for its partners in India and around the world through operational efficiencies. These products include CO-OYO, OYO OS, OYO YO!, OYO Tariff Manager, OYO Secure, OYO Wizard, and the OYO App for consumers, among others.
With more than 91 million downloads, the OYO App is one of the top three travel apps in the world with over 96 percent of partners and property staff worldwide use OYO OS for check-ins and day-to-day operations.
Follow IndianStartupNews on Facebook, Instagram, Twitter for the latest updates from the startup ecosystem.