OYO Board Approves Ritesh Agarwal’s $693 Mn Share Buy Back Plan

Amid hoteliers’ protests and international expansion spree, Ritesh Agarwal has got OYO’s board approval to buy back shares in a secondary transaction to increase his stake in the company.

OYO parent company, Oravel Stays, in an extraordinary general meeting (EGM) of shareholders has approved a $1.5 Bn primary capital infusion into the company by SoftBank Vision Fund and Ritesh Agarwal’s RA Hospitality.

The special resolution, as reported by Paper.vc, has approved the issue of 15,325 Series F compulsorily convertible preference shares at a price of $52,643.22 a share to SVF India Holdings Cayman Islands-registered entities. At the same time, RA Hospitality has been issued 13,169 equity shares at a price of $52,643.22 a share. Post the closure of the transaction, Agarwal will hold 18.03% of the company, up from his pre-investment holding of 9.43%.

It is to be noted that the reports of Agarwal buying back stake in OYO first emerged in July 2019. It was reported then Agarwal is looking to buy $1.5 Bn worth of shares from Sequoia and Lightspeed, while another $500 Mn will come in the form of primary capital, which could see existing investors also pitch in, and which would be capital for the company’s expansion drive.

Later, in October, OYO issued a media statement saying that in the Series F round, Ritesh Agarwal’s RA Hospitality Holdings’ will infuse approximately $700 Mn as primary capital in the company, with the balance $800 Mn being supplemented by other existing investors. It said that a part of the funds will be diverted towards driving growth in the United States and in strengthening its position in the vacation rental business in Europe.

OYO claimed that it has seen a 3.8x YoY growth in revenue in August 2019 (vs. August 2018), with 1.2 Mn rooms under management across hotels and homes. The company said it has a strong balance sheet of $2 Bn across group companies, a significant part of which will be further invested in the business.

Founded in 2013 by Agarwal, OYO has grown to a franchisee model. Its verticals vary from holiday homes, casino hotel and coworking spaces to budget hotels, corporate stays and more.

The company has expanded its services to more than 800 cities in over 80 countries, including the US, UK, India, China, Indonesia, and Japan.

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