French hotelier Accor SA is in advanced discussions for an up to $40 million investment in Indian budget hospitality chain Treebo, people aware of the development said, in what could be the home-grown company’s first funding round since 2017. This is as per a report in the Economic Times.
The potential investment is expected to give Treebo a post-money valuation of $205-240 million, the persons cited earlier said, and is likely to be part of a larger round, with another new investor and the company’s existing investors expected to participate.
The Bengaluru-headquartered company has so far raised $57 million across rounds from a cohort of investors, a list that includes marquee venture capital firms SAIF Partners and Matrix Partners India, and Bertelsmann India Investments, the domestic investment arm of German media conglomerate Bertelsmann.
The four-year-old company had last raised $34 million in equity financing in August 2017, which was led by Hong Kong-based hedge funds Ward Ferry Management and Karst Peak Capital. It also counts venture debt from InnoVen Capital as a backer.
The money, according to the sources, is likely to be used for funding the company’s expansion plan.
Thirty-six months from the closing date of the transaction, Accor will also have the option of acquiring Treebo.
Accor, Europe’s biggest hotel group and the second-largest hotel operator outside the US, had a market capitalisation of Euro 9.91 billion, as of Friday. It operates the AccorHotels, Sofitel and Mercure brands, amongst others.
The development comes even as the country’s tech-focused hospitality sector is dominated by SoftBank-backed OYO, which raised $1.1-1.2 billion in its latest round of funding, which was led by the Tokyo-headquartered strategic holdings company, as well as from a host of strategic investors, including, ride-hailing majors Grab and Didi Chuxing, and Airbnb.
Over the last 12 months, Treebo has been expanding its suite of products as well. In November last year, the company launched three sub-brands for different consumer segments, while also unveiling a new logo.
Treebo operates more than 500 properties, spread across 90 cities in India, with 10,500-11,000 rooms under management.
At the time, the company, which works on a franchised model, had stated that the majority of its property portfolio will be under the Trend brand, which operates in the Rs 1,500-Rs 2,500 price range.
Additionally, the entry-level brand Trip will operate in the Rs 1,000-1,500 price range, while Tryst, which was earlier known as Select, will be the premium budget brand, operating in the Rs 2,500-4,000 price range.