OYO Hotel
An employee sits next to the logo of OYO, India's largest and fastest-growing hotel chain, at the reception of a hotel in New Delhi (Photo: Reuters / Anushree Fadnavis)

Indian hotel and lodging startup company Oyo has reportedly raised more than $1.5 billion in new funds from its founder and a number of other investors. The raising of the substantial capital comes at an opportune time for the company as it looks to expand its business in the United States and Europe in the coming months.

The company's founder Ritesh Agarwal and tech investment giant SoftBank Group Corp had led the latest investment round along with a number of other minor investors. Agarwal was by far the largest investor in the new funding round.

The 25-year old founder reportedly spent around $700 million to increase his stake in the company as part of his previously announced plan to spend up to $2 billion to triple his ownership stake. Bankrolling Agarwal's plans will be Japanese banks Nomura Holdings and Mizuho Financial Group.

Other investors that contributed to the rest of the $800 million dollar investment included existing stakeholders such as Softbank's Vision Fund, Sequoia India, and Lightspeed Venture Partners. Agarwal will partially be buying some of the stocks owned by Sequoia and Lightspeed through a separately established entity called RA Hospitality Holdings.

In July, Agarwal made headlines when he announced plans to triple his stake in the company from 10 percent to 30 percent. The young entrepreneur established the company in 2013 and has since built it up to become India's second-most valuable startup.

Oyo currently has a market valuation that exceeds $10 billion. The company operates around 1.2 million rooms, located in more than 80 countries worldwide.

The company officially entered the US market earlier in the year, with the establishment of 7,500 rooms located in 60 US cities. Oyo plans to accelerate its expansion plans into foreign markets in the coming months, with its eyes set on Europe and other cities in the United States.

Agarwal mentioned in a statement following the latest funding round that the company plans to establish itself as a truly global brand out of India. Despite its rapid expansion, Agarwal clarified that they will still be focusing on the efficiency and the quality of the business to ensure profitability.

Oyo's business model has proven to be quite effective in generating profits as evident in its rapid growth since it was established. Oyo mainly forms partnerships with existing hotel owners, which they then provide standardized supplies and renovations. Oyo basically takes care of all the upgrades and renovations for hotel owners and in return, it gets a roughly 25 percent cut out of every booking.