According to media reports, H World Group, formerly known as China Lodging, has sold one crore equity shares in Oyo (Oravel Stays Limited) to a group of UAE-based family offices and institutional investors in a series of transactions.
On a fully diluted basis, this corresponds to a 0.15 per cent stock sale in H World Group. H World Group owned 0.78 per cent of Oyo through one of its subsidiaries before to the share sale.
As a result, the current dilution represents one-fifth of its stake in Oyo. According to reports, the deals, which were completed in numerous tranches mostly over the course of 2022, earned H World Group more than Rs 75 crore.
H World Group's partial exit results in a 500 per cent return on share sale and a residual stake worth more than Rs 300 crore.
This equates to a USD 6.6 billion valuation for the hotel tech unicorn, which has been aiming to list on Indian stock exchanges. The most recent secondary market transaction involving Oyo's equity shares took place in October of last year, when certain family offices purchased the company's shares for USD 6.6 billion.
This suggests that, despite greater business success, the company's valuation has not increased in an environment of increased scrutiny on startup valuation multiples. Following this acquisition, H World Group will own 0.63 per cent of Oyo.
H World Group, a Nasdaq-listed company, purchased a share in Oyo in 2017 for USD 10 million at a stated worth of USD 850-900 million. This was an addition to a USD 250 million fundraising round led by SoftBank Vision Fund.
Moody's (Moody's Investors Service) recently reported that it expects Oyo to achieve EBITDA profitability for the FY24. According to Moody's, Oyo will generate EBITDA of USD 50 million to USD 55 million in FY24.