Olive, the co-living and hospitality arm of Embassy Group, is looking to raise $20 million and bring on board a strategic investor with a minority equity stake in the brand, company co-founder and chief executive Kahraman Yigit told HT Digital.
Informal talks have commenced, and the exercise is likely to conclude in six months, he added.
“It is not solely for capital, we are looking to bring on board a strategic partner who will enable us to enhance our offerings and abilities,” Yigit said, adding that following the fundraise, the brand is also looking to further its tech infrastructure to build a larger overarching system.
The Embassy Group holds a 70% stake in Olive, while the remaining is shared between co-founders Kahraman Yigit and Dhruv Kalro.
Olive presently runs 55 co-living and hotel properties across Bengaluru, Mumbai and Goa, with a total of 2,688 keys. It has plans in the pipeline to add another 5,001 keys, as per data shared by the brand.
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The company operates four sub brands – Olive Life, Olive Zip, Olive Hotel, and Villa Olive – ranging from co-living and budget stays to luxury resorts, hotels, and villas.
Business performance
Olive is looking to double its revenue in the ongoing financial year (2024-25) from the ₹51 crore clocked in the last fiscal, Yigit said. “We’re already at 40% of the target in the first quarter of this financial year,” he added.
The company is, however, running late on its initially anticipated timeframe of turning profitable by June 2024, owing to a lag in construction timelines. “We’re set to turn profitable by the end of this year,” Yigit said, sharing the new expected timeline.
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Presently 90% of the brand’s business comes in the form of short stays, with long stays fetching anywhere between ₹15,000-40,000 per unit into the company’s kitty, Yigit said.
Embassy Group’s contribution
The Bengaluru-headquartered real estate major Embassy Group had pledged an investment of ₹2,000 crore into Olive, back in 2020. However, so far less than 5% of this fund has been deployed, Yigit informed HT Digital.
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Rental yields on long stays fell under 10% following the pandemic, from the anticipated 13-14% prior to the event, he said. Following Covid-19, construction costs shot up due to inflationary pressures and rents did not catch up as per expectations, leading to a halt in further investments into real estate ownership (ProCo) by the company, he explained.
