SUMMARY
Agarwal announced the buyback plan in September this year
The OYO founder has financed the buyback by taking a loan from Japanese banks Nomura and Mizuho
With the closure of the deal, Agarwal will own about 30% stake in the company
Lightspeed Venture Partners and Sequoia Capital India have allegedly completed their transaction to sell about a 15% stake in Gurugram-based hospitality unicorn OYO to founder Ritesh Agarwal for $1.5 Bn.
In September 2019, OYO’s founder Ritesh Agarwal had said that he would be buying back shares worth $1.5 Bn from venture capital investors Sequoia Capital and Lightspeed Venture Partners. Agarwal and OYO had got a nod from CCI for the same and to infuse $500 Mn further into the company.
Confirming the development, Agarwal said, “We have been able to complete the secondary transaction with Lightspeed and Sequoia.” This puts an end to all speculations about whether the transaction would take place after SoftBank’s investment in coworking space company WeWork stumbled.
The OYO founder has financed the buyback by taking a loan from Japanese banks Nomura and Mizuho. With this deal, the company’s valuation will double to $10 Bn, compared to the already existing $5 Bn. The deal will take Agarwal’s shareholding to an estimated 30%. Japan-based SoftBank will have about 50% stake.
Considered the richest cashout in India’s startup ecosystem, OYO will be buying half of Lightspeed’s current 13.4% stake in OYO at $1 Bn, as per earlier reports. The US-based VC firm has been backing OYO since 2014 and has invested close to $28 Mn in the company so far. Considering the current buyback rate, Lightspeed will be earning 50x profit after the partial exit.
The budget hospitality company had also planned to buy 10.24% from Sequoia Capital for $500 Mn. Sequoia has invested about $25 Mn in OYO and will reportedly continue to hold a 4-5% stake leading to about 20x return on its investment.
Meanwhile, according to the company filings accessed by Inc42 earlier for a story, OYO reported a loss of INR 2384.69 Cr, a 5.5X jump from its losses of INR 360.42 Cr of FY18. The valuation report shows that the company has increased its expenses by 3.9X in FY19 with a jump in revenues by 3.5X. The company’s operational revenue grew to INR 6456.9 Cr in FY19, a jump of 3.56X from INR 1413 Cr in FY18.
OYO was founded in 2013 as a hotel aggregator platform. The company, whose investors include Airbnb, SoftBank Vision Fund, Greenoak Capital, Sequoia Capital and Hero Enterprise, has raised close to $1.7 Bn in funding.
OYO has also invested and acquired holiday homes, casino hotel and coworking spaces in more than 800 cities across 74 countries till now. The company’s product portfolio also includes OYO Homes, OYO Living, OYO Rooms, Silverkey, Pallets, etc.
