Deal with Oyo brings profit back for Lightspeed and Sequoia executives

The venture capital firms that share profits with Oyo, earn between $400-500 million.

In one of the largest cash distributions for venture capitalists in India, general partners (GPs) at Lightspeed Venture Partners and Sequoia Capital have collectively earned around $400-500 million as their share of the profits after the two funds part sold their shares in Oyo Hotels & Homes to its Founder Ritesh Agarwal.

While GPs at Lightspeed are expected to have mopped up $250 million, Sequoia executives are understood to have taken home around $150 million.

The windfall for the fund executives comes on the back of RA Hospitality, a special purpose vehicle domiciled in the Cayman Islands, recently buying Oyo shares worth $1.3 billion from these two venture firms on behalf of Agarwal. The stock buyback was an unprecedented move by the Indian entrepreneur giving him about 30% ownership in Oyo.

Lightspeed Venture Partners held about 13% stake in Oyo and partially sold its stake for roughly $850 million while Sequoia Capital raked in $450 million, overall.

Second to Flipkart Deal

“The money hit the bank recently and is one of the largest carried interests for GPs in India. For this kind of distribution among the top team you need at least $1 billion in exit,” said a person privy to the development.

GPs are the top-most investment professionals at a fund who actively manage and allocate assets across companies. Carried interest is defined as the profit share earned by GPs in an investment firm, after the fund’s sponsors, or Limited Partners (LPs), receive their share of gains once a fund exits a company following a merger, acquisition or in case of an IPO.

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