Zolostays Sells Student Housing Business

Zolostays, a co-living and home rental startup, has divested its student housing business, which provides accommodation services for educational institutions, to Good Host Spaces. This strategic move aligns with Zolostays’ aim to concentrate on its primary services.

Details of the Sale

The Zolostays board has sanctioned a special resolution for this transaction, conducted as a slump sale valued at Rs 107.8 crore (roughly $12.5 million), according to official documents from the Registrar of Companies.

Out of the total amount of Rs 107.8 crore, Rs 97.02 crore (90%) will be received in cash, while the balance of Rs 10.78 crore will be compensated via debentures issued by Good Host Spaces to Zolostays.

Background of Good Host Spaces

Good Host Spaces is known for owning and managing purpose-built student accommodations near premier university campuses, including Manipal University, OP Jindal Global University, and Shoolini University.

Recent Acquisition by Alta Capital

In October 2023, Alta Capital reportedly acquired the full 100% stake held by Goldman Sachs and Warburg Pincus in Good Host Spaces for an estimated $320 million.

Implications of the Sale

This sale positions Zolostays to hone in on its main business operations and explore growth opportunities in those sectors. The lump sum from the sale is expected to enhance the company’s liquidity and fortify its balance sheet.

Funding and Financial Performance

Zolostays has also managed to raise Rs 20 crore in debt by issuing non-convertible debentures to VentureSoul Managers India LLP, earmarked for business expansion and working capital needs, as indicated by a separate resolution.

To date, Zolostays has raised over $110 million in funding, including a $56 million Series C round led by Investcorp and Mirae Asset. As per various sources, Nexus Ventures stands as the largest external stakeholder, with Investcorp and Mirae Asset following closely behind.

Growth Figures

For the fiscal year ending March 2024, Zolostays recorded an 11.4% increase in revenue, amounting to Rs 204.4 crore. Meanwhile, its losses decreased by 17.4% to Rs 57 crore during the same period, although figures for the last fiscal year (FY25) are yet to be announced.

Market Dynamics

The recent sale marks a significant moment within the industry, where Good Host Spaces has gained an advantage over its competitors in various aspects. Through substantial funding and strategic partnerships with rapidly growing university campuses, it has established a strong foothold, which may have influenced existing stakeholders at Zolostays to withdraw.

The contrasting strategies of the acquired firm and the acquirer, focusing on independent PG accommodation versus dedicated campus services, reflect a notable shift in the market landscape. It will be intriguing to observe how Good Host Spaces manages the newly acquired business going forward.