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A budget hotel chain in India Despite the fact that the epidemic cost Oyo a substantial amount of its revenue, the company is getting closer to obtaining a new investor: Microsoft.

According to people familiar with the situation, Microsoft is in advanced talks to invest in Oyo, valuing the Indian firm at over $9 billion. The investment's proposed size is unknown. According to one insider, a deal might be finalised as soon as Friday.

In 2019, Oyo was valued at around $10 billion, while SoftBank, a significant investor in the Indian business, had lowered its valuation to $3 billion in previous quarters.

One of the persons, who, like everyone else, requested anonymity when discussing private things, said the potential arrangement might include Oyo switching to Microsoft's cloud services.

Ritesh Agarwal, the founder and CEO of Microsoft and Oyo, declined to comment on Thursday evening.

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In recent years, Oyo, one of India's most valued businesses, has aggressively expanded into new countries such as Southeast Asia, Europe, and the United States. However, some of its blunders — a "toxic atmosphere," a governance breach, and a sour relationship with many hotel owners — have hampered its expansion.

The pandemic struck just as the startup was promising to enhance its connection with hotel owners. As a result, earlier this year, Oyo paused its growth and cut off thousands of employees throughout the world as countries around the world imposed lockdowns.

Agarwal told Bloomberg TV earlier this month that the pandemic hit the seven-year-old firm like a "cyclone." “We developed something for so many years, and it just took 30 days for it to decrease by almost 60%,” he said, adding that the company had not decided whether or not to go public.

According to Agarwal, Airbnb backed Oyo had between $780 million and $800 million in the bank and has reduced its "monthly burn" across all operations to $4 million to $5 million. (In December 2020, the company had around $1 billion in the bank.)

Oyo announced earlier this month that it has obtained $660 million in debt after Agarwal's remarks at the aforementioned conference. Another person familiar with the situation told TechCrunch that the debt was utilised to pay off the previous obligation.

Oyo reported in a filing on Wednesday that the debt's term includes the option to exchange shares at a later date.

If the deal between the two companies goes through, it will be Microsoft's latest investment in a business in India. In the South Asian market, the firm has supported a number of firms, including news aggregator and short-video platform DailyHunt, e-commerce behemoth Flipkart, and logistics SaaS firm FarEye.

(Source: Tech Crunch)