In one of the first instances of share buyback by the founder of an Indian startup, Ritesh Agarwal, founder & CEO of OYO Hotels & Homes has signed a deal to buy back shares worth $2 billion (nearly Rs 13,770 crore) from early investors through his Cayman islands-registered entity, RA Hospitality Holdings.
According to a statement from the company, the deal will see Agarwal buy back a part of the stakes of early investors Lightspeed Venture Partners and Sequoia India through RA Hospitality Holdings. Sources say that this will increase Agarwal’s shareholding in the company from around 9-10 per cent currently to nearly 30 per cent.
Lightspeed Venture Partners and Sequoia India held around 13.4 per cent and 10.24 per cent respectively before the deal, and while their shareholding will come down, it is not clear by how much. Market sources say the deal values the company at nearly $10 billion.
"Company's founder and CEO Ritesh Agarwal, through RA Hospitality Holdings (Cayman), has signed USD 2 billion primary and secondary management investment round, supported by global institutional banks and his financial partners," OYO said in a statement.
The sharp increase in Agarwal’s stakes come in the backdrop of venture capital juggernaut Softbank’s reported plans to increase its stakes in the company with another round of investments. Earlier this month, regulatory filings had disclosed that minority shareholders, including Lightspeed Venture Partners, Sequoia and RA Hospitality Holdings had put in riders wherein Softbank will need their approval to increase its stake above 50 per cent. Softbank currently has close to 46 per cent in the company, say sources.
“It is a very exciting time for OYO right now as we make great living spaces come alive across all corners of the world from Texas to Tokyo…I am deeply humbled and delighted to have gotten the support of all our investors, the board and above all the institutionalized financial partners that have provided the necessary financial support towards realizing this vision. Needless to say, the deal remains subject to shareholder and regulatory approvals.” Agarwal said.
Reiterating their commitment to the firm, Mohit Bhatnagar, managing director, Sequoia Capital India Advisors, said, “It's been five years since Sequoia India first partnered with Ritesh and his team…We remain committed to supporting this world-class management team as they continue to create living spaces across the world”.
Munish Varma, Managing Partner, SoftBank Vision Fund, said, “We have confidence in Ritesh’s vision for OYO and how the team has come together to build a truly global brand from India. It has been an exciting journey so far and we hope to achieve many more milestones together in the time to come.”
OYO began operations just six years ago in 2013, but claims to have already become the world’s third-largest chain of hotels, homes, managed living and workspaces, with a presence in around 80 countries. It counts among its investors those like Airbnb, Greenoaks Capital and Hero Enterprise, aside from those mentioned earlier.
According to the company, it has recorded a 4.4-fold year-on-year growth in revenue in June 2019 (vs June 2018), with around 1 million rooms under its management across hotels and homes around the world. Earlier this week, it made its entry into India’s co-working space, rolling out three different brands, and confirmed its acquisition of Innov8, a co-working spaces provider.