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Credit Suisse to infuse USD 100 million into Indian co-living startup Zolostays

The USD 14 billion co-living space in India is crowded with multiple players such as Oyo, NestAway, CoLive, among others.

Photo by Helena Lopes on Unsplash

Bengaluru-based co-living space provider, Zolostays is in talks with Swiss multinational investment bank and financial services company Credit Suisse to raise around USD 100 million, according to a report by Press Trust of India.

“We are in talks with Credit Suisse to raise USD 100 million in a Series C round to fund our expansion plans to increase the number of beds to 200,000 by the end of 2021 and also plan to increase our headcount,” said Zolostays co-founder and chief executive officer Nikhil Sikri.

Earlier this year in January, the five-year-old company had raised USD 30 million in a Series B funding round led by IDFC Alternatives, Mirae Asset, and Nexus Venture Partners.

The company claims to have 35,000 beds across nine cities including Bengaluru, Chennai, Kota, Gurugram, Hyderabad, Pune, Mumbai, Noida, and Coimbatore. Out of these, it had dedicated 3,000 beds for students. Sikri told PTI that 15,000 beds are under various stages of development and will be live before March.

However, he underlines that the additions will be only in existing geographies as he wants to invest only in markets Zolostays is familiar with. Company’s student living portfolio would not cross 10% of the expansion plans for the next few years.

Zolostays has partnered with established real estate developers like Godrej Properties, Shapoorji Pallonji Real Estate, Sobha Developers, Olympia Group, DRA, and Ozone Group.

“We either lease out an entire building from the developer or share the upside with them. Given the current slowdown in the realty sector, many developers are looking to partner with people like us as they are assured of good returns,” Sikri explained.

The co-living market in India is set to grow at a CAGR of 17% in the next five years to reach  a market size of nearly USD 14 billion, according to a joint report by the Federation of Indian Chambers of Commerce and Industry (FICCI) and American commercial real estate services firm Jones Lang LaSalle. The report mentions that demand for co-living has been triggered by millennials and students migrating from their domiciles to cities for work and colleges to study, respectively.

The concept of shared living spaces, which is less formal than shared office spaces, has been revolutionary and more Indians are seeking such alternatives to traditional living. Besides Zolostays, co-living startups in India such as NestAway and CoLive are making a mark. The four-year-old NestAway has expanded to more than ten cities across India and in September 2019, it raised USD 4.8 million in a series D round from Goldman Sachs. Presently, CoLive owns 20,000 beds with 2.5 million square feet under its ambit.

Co-living in India is also gaining traction from big players like the Ritesh Agarwal-led hospitality unicorn OYO and Airbnb. In the later part of 2018, hotel chain Lemon Tree and private equity firm Warburg Pincus had declared that they have signed a joint venture to invest USD 15 billion into the Indian co-living space.