Oyo completes G6 Hospitality acquisition from Blackstone Real Estate for $525 million

Hospitality startup Oyo has accomplished the acquisition of US-based lodging franchisor G6 Hospitality, the father or mother firm of Motel 6 and Studio 6 manufacturers, from Blackstone Real Estate for $525 million.Oyo had introduced its plans to acquire G6 Hospitality on September 20. The acquisition is anticipated to spice up the startup’s earnings earlier than curiosity, taxes, depreciation, and amortisation (Ebitda) to over Rs 2,000 crore in FY26, in line with a press release.

Motel 6 alone is projected to contribute over Rs 630 crore to Ebitda within the first full 12 months following integration, it added.

The transaction provides roughly 1,500 franchised accommodations throughout the US and Canada to Oyo’s portfolio, considerably enhancing its presence in North America. The mixed entity is anticipated to generate a gross reserving worth of roughly $3 billion, with G6 Hospitality accounting for $1.7 billion of that whole quantity.

“We might see this shall be a worth accretive acquisition as a consequence of their sturdy model franchise within the US, potential for development and synergies. By the acquisition course of and the conclusion, that perception is additional strengthened. Our success in Europe, the place we practically tripled Ebitda by means of strategic synergies for our trip properties enterprise, has given us a transparent roadmap for worth creation,” mentioned Ankit Tandon, world chief enterprise officer and head of mergers and acquisition (M&A) of Oyo.

On November 18, ET reported that Oyo’s founder Ritesh Agarwal is planning to purchase one other Rs 550 crore value of shares to extend his stake within the firm.

The startup’s final funding spherical, totalling $175 million, was led by Agarwal, who invested $100 million. Different individuals included household places of work and personal traders equivalent to InCred Wealth, J&A Companions of Mankind Pharma promoters, ASK Monetary Holdings, and investor Ashish Kacholia. This spherical valued Oyo at about $2.5 billion, as reported by ET in June.The corporate’s valuation at present stands at $4.6 billion after Nuvama Wealth and Funding Restricted acquired shares worth Rs 100 crore in its parent, Oravel Stays, at Rs 53 per share by means of a secondary transaction, as reported by ET on December 15. That is round 49% decrease than the Softbank Group-backed firm’s peak valuation of $9 million in 2021.

Additionally, the deal comes at a time when Oyo’s US operations have been displaying development. Since its 2019 launch within the area, Oyo has established a presence throughout 35 states with round 400 accommodations.

“Blackstone has been a fantastic investor for G6 Hospitality. They stored the core enterprise competencies intact and have set us up for fulfillment as strategic traders coming in. The US is a lovely marketplace for us and this acquisition will present a powerful development impetus,” mentioned Rakesh Prusti, group normal counsel at Oyo.

Oyo reported its first-ever revenue after tax (PAT) of approximately Rs 229 crore within the fiscal 12 months ended March (FY24), adopted by a profit of Rs 132 crore in the first quarter of the present fiscal 12 months.

Throughout an August city corridor, Agarwal attributed the corporate’s “sturdy efficiency” to its growth throughout key markets, together with India, Southeast Asia, and the US, in addition to the expansion of company-serviced properties and strategic investments in Europe.