Microsoft Invests $5 Million in Oyo

The deal between Microsoft and Oyo has been finalised. The US-based tech giant has invested $5 million in the SoftBank-backed hospitality firm, which is considered a strategic deal for both companies. At just 0.52% of the valuation, the sale is obviously small, but it

BY Realty Plus
Published - Saturday, 21 Aug, 2021

The deal between Microsoft and Oyo has been finalised. The US-based tech giant has invested $5 million in the SoftBank-backed hospitality firm, which is considered a strategic deal for both companies. At just 0.52% of the valuation, the sale is obviously small, but it might serve multiple objectives, including allowing key investors to report the same valuation on their books on the basis of this deal. The duo have chalked out a deal without disclosing much details of the transaction. The possible deal was first indicated about 3 weeks ago in the media, as a precursor to Oyo’s IPO. Oyo has kicked off Series F2 round and has allotted 5 equity shares and 80 preference shares to Microsoft Corporation at an issue price of $58,490 per share to raise $5 million, regulatory filings show. Going forward, the company may receive more money from Microsoft. According to Fintrackr’s estimates, Oyo has raised the fresh capital at a post-money valuation of $9.6 billion. The company was reportedly valued at around $9 billion when it raised over $7 million from Hindustan Media Venture Limited in March this year. This jump in valuation can be validated with the surge in the share price of Oyo in the last two rounds. The company had raised Rs 5,611 crore or around $800 million in March 2020 at the share price of $51,555.1 per share. The share price has grown by 13.5% to $58,490 in the latest funding. It’s worth noting that the Gurugram-based company’s valuation was dropped to $8 billion in August 2020 from $10 billion in November 2019, according to a report by Hurun. The report came amidst a sharp decline in the businesses of the hospitality sector due to the coronavirus pandemic. Oyo had to shut its non-performing businesses and went through layoffs and pay cuts during the period. The deal may involve Oyo shifting to use Microsoft’s cloud services platform, Azure. The public cloud computing platform provides services such as analytics, storage, computing and networking. While Oyo has not raised any larger equity round for a long time, the company has recently picked up $660 million in debt from global investors. Five months ago, it also raised $204 million in debt from SoftBank for its Singapore subsidiary Oyo Hotels (Singapore) Pte. Ltd.