The Indian Wire » Startups » Oyo’s Ritesh Agarwal in talks to buy back shares from Sequoia Capital, Lightspeed Venture Partners

Oyo’s Ritesh Agarwal in talks to buy back shares from Sequoia Capital, Lightspeed Venture Partners

In order to bulk up his ownership, Ritesh Agarwal, founder of Oyo Hotels & Home, is in the middle of buying back shares from early investors Sequoia Capital and Lightspeed Venture Partners, reported ET, citing three people familiar with the matter.

The unprecedented move by Agarwal will help him raise his stake to around 30 per cent from the current 10 per cent. Also, this may go up to as much 32-33%, including the stakes held by the management and employees.

“While Agarwal will buy $1.5 billion worth of shares from Sequoia and Lightspeed, another $500 million will come in the form of primary capital. The primary part of the deal may see existing investors also pitch in,” said a person privy to the details. The $500 million in primary capital will go into the company’s coffers, said an anonymous source.

The SoftBank backed hospitality chain Oyo was started by Ritesh Agarwal in 2013. The startup was started from a single hotel to over 8500 hotels at present. It is the fastest growing network of hotels, offline and online.

To finance the buyback, the 26-year-old founder has been in talks with financial institutions and banks in India, Japan and Europe to shore up $2 billion in secured debt, sources close to the matter said on condition of anonymity.

Oyo is expected to be valued at around $10 billion in what will be a mix of secondary and primary transactions, they said.

Agarwal is going to pledge his shares in the process of raising debt, said another source.

The Oyo founder, along with the management, will emerge as the second-largest shareholder after SoftBank Vision Fund, which owns almost 48% of the company.
As per clauses drawn up by Oyo, the Japanese group cannot increase its ownership beyond 49.9 per cent without receiving approvals from Agarwal, Sequoia, Lightspeed and Greenoaks Capital.
While, other hospitality startups, which are emerging at a fast pace in India includes  YatraFabhotelsTreeboMakeMyTripClearTrip, etc.

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