Softbank takes Oyo’s Latin America business in own hands as virus infects Ritesh Agarwal’s startup giant

After the coronavirus infected once the brightest star in Softbank’s investment portfolio Oyo, the investment firm has decided to take a direct role in the management of Ritesh Agarwal-founded startup’s Latin America business. Softbank, through a joint venture, will control all hotels in the LatAm region, Henrique Weaver, head of Oyo Brazil, told Reuters in an interview on Friday. The Japanese multinational conglomerate, which also happens to be the biggest investor in homegrown Oyo, will use part of its $5 billion Latin America fund to invest in the newly formed company called Oyo Latam, Reuters reported. The newly founded company will take the reins of 1,000 hotels situated mainly in Brazil and Mexico, Henrique Weaver said.

What’s up with Oyo?

Hit with a pandemic, Oyo has been cutting costs, put its expansion plans on hold, reduced hotel footprint, and has laid off employees after revenues fell. According to the most recent fundraiser valuations, Oyo is pegged at $10 billion. Softbank’s move comes close on heels of the crisis at hand at Oyo and the both companies would now have equal representation on the board. This indicates that the Japanese investor remains keen on keeping Indian unicorn on track despite hiccups and is more closely overseeing Oyo’s operations in markets including China, India and Japan, Reuters reported three sources as saying.

“Latin America has proved to be a good fit for Oyo, with a super fast growth pace because the hotel market is extremely fragmented in the region,” Henrique Weaver said. However, due to the pandemic, the company was forced to let go off 500 employees in Brazil. The company now has a workforce of 140 people and has also given up its office space and slashed operating expenses. The company has also laid off employees in the United States and Europe and shuttered offices in other global markets.