Oyo secures $660 million in debt funding to revive COVID-19 impacted biz

Oyo Hotels & Homes has concluded a debt financing round of $660 million from global institutional investors in order to service its existing loans. 

With this, the hospitality firm aims to recoup from the disruption caused by the COVID-19 pandemic's second wave. The company did not divulge the names of the investors; however, sources told the Economic Times that those who participated in Oyo's funding round comprise Fidelity Investments, Varde Partners, and Citadel Capital management.

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The company added that its offer was oversubscribed almost 1.7 times, along with a total commitment of around $1 billion from leading institutional investors. 

Amid strong interest from these investors, Oyo raised the offering size by 10% to $660 million, from $500 million initially, the report added. 

This led to the overall financing being increased at an interest rate of 825 basis points, as against the initial price guidance of 850 basis points, the company stated. 

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As per the conditions of the deal, Oyo has to pay back the principal loan amount after six years besides requiting interest recurring intervals. The company will utilise the funds raised to retire its past debts, boost product technology and strengthen its balance sheet, as well as other business purposes comprising investment in product technology, Abhishek Gupta, group chief financial officer, told the publication.

"This will enable Oyo to widen its shareholder base and get significant third-party validation in terms of where the business quality is," a source said. 

Oyo is the first Indian company to raise capital via the term loan B (TLB) route. TLB refers to a portion of senior secured syndicated credit facility from international institutional investors.