Fast-growing Indian chain OYO Hotels & Homes plans to raise $1.5 billion to fund further expansion.

Much of the funding will go towards continued growth in the US, where it has 7,500 rooms, as well as strengthening the company’s position in the European holiday rentals sector.

RA Hospitality Holdings’ will inject about $700 million as primary capital in the company, with the balance $800 million being supplemented by other existing investors.

Earlier this year, RA Hospitality Holdings won approval to invest  $2 billion in OYO.

Lightspeed Venture Partners and Sequoia are selling part of their shareholding in OYO to help the founder increase his stake.

OYO raised more than $1 billion in its last financing round in September last year, led by SoftBank through SoftBank Vision Fund, with participation from existing investors Lightspeed Venture Partners, Sequoia and Greenoaks Capital and supported by new strategic partners like Airbnb.

Founder and CEO Ritesh Agarwal said: “The continued support of our investors like Softbank Vision Fund, Lightspeed, Sequoia Capital is a testament to the love, trust and relentless support of our asset owners and customers, hard work of all ‘OYOpreneurs’, and our commitment to making living the good life a reality for over 3.2 billion middle-income people around the world.

“With approval now in place, the company will get a capital infusion of approximately $1.5 billion to support this mission, supported by me and other shareholders.”

He added: “I am also happy to share that on a year-on-year basis, we have seen that not only are we operating profitably at the building level but at the same time our ebitda [earnings] has also improved by 50%.

“The losses as a percentage of NRV [net realisable value] have also been on a steady and significant declining curve.

“The growth across verticals in India and globally has been phenomenal and we truly believe that we will be able to build a truly global brand out of India, while ensuring that the business is run efficiently and with a clear path to profitability.

“Our immediate goal however is to make forward looking investments so we can achieve our mission, while delivering on our fiduciary responsibility to our investors by building a sustainable business.”