Goldman Sachs, Accel and RB Investments to invest more money in FabHotels

Casa2 Stays Pvt. Ltd, which operates budget hotel chain FabHotels, will raise nearly Rs 40 crore from existing investors through compulsorily convertible preference shares in a Series B2 round. Gurugram-based FabHotels will raise the money from United States-based Goldman Sachs, Accel, and Singapore’s RB Investments at a valuation of Rs 856.4 crore, citing regulatory filings with the ministry of corporate affairs, Entrackr reported.

Both Accel and Goldman will invest around Rs 14.2 crore each in the budget hotel operator while RB Investments has committed Rs 10.66 crore, the report said. Following the funding, Goldman will be FabHotels’ biggest shareholder with a 25.64 per cent stake while Accel and RB Investments will hold 24.68 per cent and 18.72 per cent, respectively.

This round will come after FabHotels raised nearly Rs 54 crore in June 2019, which valued the company at about Rs 651 crore. In 2017, Goldman led a US$25 million (around Rs 161 crore) Series B round in the company, where Accel was also participating.

The budget hotel chain was founded by Vaibhav Aggarwal and Adarsh Manpuria in 2014. Aggarwal had previously co-founded Rocket Internet-backed online furniture e-tailer, FabFurnish. He also had stints at Groupon and Bain & Company. Manpuria had served as venture development associate at Rocket Internet Ventures and had worked with many of its portfolio companies, including FabFurnish, Foodpanda, and Jabong.

FabHotels works on an asset-light model, wherein, it uses the technology platform to promote its partner hotels with capacities of 20-40 rooms and provides standardised services to budget travellers. It also operates a professional training academy for hotel staff and quality control teams.

The news of the company’s latest fundraise comes just a day after reports said that a competitor, Treebo, had raised a little over Rs 3 crore from Bennett Coleman and Co. Ltd., the owner of the Times Group.

Perhaps the biggest competition for every startup and player in the hotel space is SoftBank-backed Oravel Stays Pvt. Ltd (OYO). In November last year, it was reported that the startup would raise US$1.5 billion (around Rs 10,651 crore) in a Series F funding round from founder Ritesh Agarwal. That development came after Agarwal in July said that he would deploy around US$2 billion to raise his stake in the hospitality platform.