Tencent named potential lead investor of Oyo Rooms

Oyo 101 Click Hotel, Dubai, UAE. Photo credit: Oyo Rooms(Image: Oyo Rooms)

China-based investor Tencent is in talks to lead a $300-500-million round of funding for the hotel brand Oyo Rooms. 

The recent fundraiser is expected to increase Oyo Room's value to more than $2 billion. This is double its previous $850-million value, which the company raised in 2017 from SoftBank through its Vision Fund. 

Oyo is also negotiating financing deals with a few other Chinese companies and investors. This will be the first fundraiser after 2015 led by an investor other than SoftBank, if Tencent or another Chinese investor agrees to back the hotel company.

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"The company is engaged with Tencent, and a term sheet is likely to come in. There's a bunch of other investors also in talks, but those are preliminary at the moment. The fundraise is largely to grow the China business," a source familiar with the matter told The Times of India. 

Chinese hotel operator China Lodging Group began investing in Oyo Rooms in September 2017 in the previous round of funding. China Lodging Group acquired a less-than 5-percent stake for $10 million. The two companies planned to combine Oyo's technology and operations with China Lodging Group's coverage and development capability in China through the agreement. 

The partners will also develop technology sharing projects to learn about other types of technology and hospitality, including an exchange program for employees and the sharing of technology and intellectual property.
Oyo raised $186 million within the three funding rounds prior to this one. Other investors of the brand include Sequoia Capital, Lightspeed Venture and Hero Enterprises.

Oyo advanced its global expansion in July 2018 by launching operations in London. The brand opened an Oyo Townhouse in Sussex Gardens/Paddington district. The Oyo Townhouse Sussex marked Oyo's sixth market, following China, Dubai, Malaysia, Nepal and Thailand.  The brand opened its first hotels in Dubai and China in May 2018.