OYO’s Ritesh Agarwal To Buy Back $1.5 Bn Worth Shares

SUMMARY

Agarwal’s shareholding is estimated to be 30% after the deal

The company’s valuation has reportedly doubled to $10 Bn after the infusion

OYO plans to utilise the fund to strengthen its foothold in the market

To bulk up his ownership and stake in the company he founded, OYO’s Ritesh Agarwal will be buying back shares worth $1.5 Bn from early investors Sequoia Capital and Lightspeed Venture Partners. Agarwal and OYO has got a nod from CCI for the same and to further infuse $500 Mn into the company.

“I am thankful to the CCI and all our investors and shareholders for supporting me. The company will get an additional primary infusion of approximately $1.5 billion to support our mission,” Agarwal was quoted as saying by ET.

Agarwal seeks to boost his shareholding to an estimated 30%. The OYO founder will be financing the buyback through debt 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.

OYO will be buying half of Lightspeed’s current 13.4% stake in OYO at $1 Bn. The US-based VC firm has been backing OYO since 2014 and has invested close to $20 Mn into the company. With the current buyback rate, Lightspeed will be earning 50x profit with the partial exit.

On the other hand, OYO will be buying 10.24% from Sequoia Capital for $500 Mn.

This infusion will be utilised to maintain OYO’s position in India and China, strengthen footprint in Southeast Asia and the Middle East, and support expansion in Europe and the US.

OYO’s Investors

The budget hospitality company was founded in 2013 as a hotel aggregator platform and since then, it has expanded into a franchise model as well as into new categories such as coworking, cloud kitchens and more. The company has raised close to $1.7 Bn in funding. Its investors include Airbnb, SoftBank Vision Fund, Greenoak Capital, Sequoia Capital and Hero Enterprise.

OYO has also invested and acquired various companies to expand its business to every possible accommodation ranging from holiday homes, casino hotel and coworking spaces in 800 cities across 74 countries. It has been trying to expand into student accommodations and four-star hotels as well.

The company’s product portfolio also includes OYO Homes, OYO Living, OYO Rooms, Silverkey, Pallets, etc.