The co-living space company Zolo, based in Bengaluru, plans to sell its student housing division to Good Host Spaces Management Services, based in Mumbai, for INR 107.8 Cr (about $12.5 Mn) in a slump sale. According to regulatory papers, the startup’s plan to sell its student housing vertical to Good Host Spaces was approved by the Zolo board on February 10. 90% of the price (INR 97.02 Cr) is to be paid in cash, with the remaining 10% (INR 10.78 Cr) to be paid in optional convertible dentures (OCDs). The transaction will involve a combination of cash and debentures. In a statement, the corporation said that the transaction will allow Zolostays to concentrate on running its operations and looking for expansion prospects. The lump sum payment will fortify the company’s balance sheet and enhance its liquidity position. The company will be able to increase overall efficiency and streamline its operations thanks to the purchase.
Continuous Exit at the Top Level Hampered the Performance of Zolo
One of the founders, Akhil Sikri, left his operational position at the co-living startup in March 2023 to focus on a new business endeavour. At the moment, he serves as the chief technology officer for software service company Apsona. Isha Choudhry, who oversaw operations and human resources, had previously resigned in 2020. However, Nimesh Grover and Stanley D’britto founded Good Host Spaces in 2017 to provide the nation’s third-party on-campus student housing services. According to the company, it operates over 20,000 beds at universities including Manipal University, OP Jindal Global University, T A Pai Management, and Shoolini University, and it is present in roughly five locations.
India’s Hospitality Industry at the Centre Stage
With the approaching vacation season and the growing number of tourists, the development occurs at a time when the hospitality sector has been drawing investments and acquisitions. French hotel juggernaut Accor and aviation powerhouse IndiGo’s parent company, InterGlobe Aviation, announced earlier this week that they would be investing together in Treebo Hotels. Before that, the massive hospitality company OYO, founded by Ritesh Agarwal, had planned to invest $10 million (INR 86.6 crore) in G6 Hospitality, which it had recently acquired in February. G6 Hospitality is the US-based operator of the Motel 6 and Studio 6 brands. According to Tofler data, Zolo’s operating revenue increased by 122.5% to INR 94.65 Cr in the fiscal year that ended in 2023, from INR 42.54 Cr in the previous year. The company’s net loss for FY23 increased by 2% to INR 67.96 Cr, compared to INR 66.59 Cr the year before, despite its impressive topline performance.
