Oyo in talks with LA firm to buy Keys Hotels

Keys Hotels had been scouting for buyers for a few years and has an estimated debt of about Rs 160 crore.

Oyo in talks with LA firm to buy Keys Hotels
NEW DELHI: SoftBank-backed Oyo Hotels and Homes is in talks with Los Angeles-based Berggruen Holdings, a $2-billion private equity and venture capital firm founded by billionaire investor Nicholas Berggruen, to acquire their company Keys Hotels in India, multiple sources familiar with the matter told ET.

Berggruen Holdings is the owner of Berggruen Hotels in India, which was founded in September 2006 to build and operate business hotels under the Keys brand. Loss making Keys Hotels, which has witnessed a spate of senior level exits over the past two to three years, has a portfolio of about 20 owned, managed and franchised hotels in locations such as Mumbai, Chennai, Pune, Gurugram, Shirdi, Tirupati and Mahabaleshwar. Keys Hotels had been scouting for buyers for a few years and has an estimated debt of about Rs 160 crore.

Sources said EY is the intermediary transaction advisor for the deal. Out of its entire portfolio of hotels, Keys owns seven hotels totalling 1000 rooms while another 13 are managed and franchised.


“Oyo has approached Berggruen Holdings and due diligence has been carried out. A lot of investment has gone in Keys, but the business has been languishing. The valuations have to make sense. Keys was looking at a valuation of about $ 125 million,” said a source familiar with the developments.

Anshu Sarin, chief executive of Berggruen Hotels, said there were no deal discussions with Oyo.

"We don’t have a deal with Oyo, nor are we in conversation with them on a potential deal," she said.
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Spokespersons from Berggruen Holdings in the US did not respond to emails seeking comments till press-time Friday. Oyo dismissed the developments as ‘speculation.’

“Our acquisition strategy is targeted towards acquiring entities that assist us in building capabilities…We do not have any further announcements to make at the moment,” said an Oyo spokesperson.

In January, ET had reported that Oyo was in 'very advanced' stages of acquiring co-working space company Innov8 for about Rs 200 crore in an all-cash deal.

“Oyo has a lot of cash and is looking at co-working and co-living spaces. Keys has hotels in locations such as Whitefield in Bengaluru which could fit in with their co living focus,” added a source.
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In March 2018, Oyo acquired Chennai-based serviced apartments company Novascotia Boutique Homes and rechristened as SilverKey. It currently runs over 45 SilverKey properties in nine cities and has increased the room count by three times in less than ten months.

Oravel Stays Private Limited, the parent company of Oyo Hotels and Homes, reported a net loss of Rs 312 crore in its standalone results for financial year 2017-18, a 3% drop from last financial year, according to financial data accessed from business research platform Tofler.
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The company clocked revenues of Rs 327 crore in its standalone results for the financial year 2017-18, a 200% jump from the last financial year. The company had posted revenues of Rs 108 crore in its standalone results for financial year 2016-17. Total expenses for the fiscal were reported at Rs 638 crore.
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