It’s official — kinda — OYO Rooms, the India-based budget hotel network that has raised $125 million from investors to date, is buying rival ZO Rooms.
The deal has been speculated since December, but it appears to have been confirmed by OYO Rooms investor SoftBank, which listed the transaction in its most recent financial report issued today.
There’s no information on price or further details at this point, all that SoftBank confirmed was that OYO Rooms will pick up ZO Rooms, which landed a $32 million Series B led by Tiger Global. Added to that, Indian tech blog NextBigWhat noticed that ZO Rooms’ website has been down for 24 hours.
Both companies declined to comment when we contacted them for clarification.
TechCrunch does, however, understand that an official announcement is close and likely to made in the next two weeks. Further, TechCircle reports that ZO Rooms could lay off half of its 200 employees for the deal.
OYO Rooms is currently in 165 cities in India and it recently forayed into Southeast Asia, a region of over 600 million people, where companies like Rocket Internet-backed ZenRooms and Redoorz are pioneering the budget hotels model. ZO Rooms covers more than 30 cities in India and it too has entered Southeast Asia with expansion in mind.
OYO Rooms was founded by 21-year-old Thiel Fellow Ritesh Agarwal. The startup raised $25 million in April last year, breaking the funding record for a company started by a Thiel Fellow, before going on to close a $100 million Series B round in August. ZO Rooms is also well-backed, and it wouldn’t be the first time that Tiger Global and SoftBank have joined forces. Both organizations are among the most active investors in India, and they previous teamed up to back Uber-rival Ola and hyperlocal delivery startup Grofers in India, and Chinese ride on-demand company Didi Kuaidi.
This consolidation is interesting since it comes at a time when other companies are pulling back on ambitious growth plans in light of a more challenging investor climate in India this year. In recent weeks, grocery on-demand companies Grofers and PepperTap have both pulled out of cities and canceled mega expansion plans to conserve their funding and lock their business models down. It could be that worsening investment conditions forced ZO Room’s hand in this case, or that the both companies and their investors decided that pulling together is the optimal way to move forward.