Oyo head gears up to raise company stake to 30% in $2.2Bn transaction

Oyo Hotels & Homes' Founder, Ritesh Agarwal is set to buy partial stakes of two early investors in Oyo, Lightspeed Venture Partners and Sequoia Capital, while injecting $700 million in primary investment

Ritesh Agarwal, Group Chief Executive of Oyo Hotels & Homes, is undertaking one of the largest stock buybacks by an Indian entrepreneur. 

The estimated $2.2 billion transaction will see the founder of the hospitality chain raise his stake in the company about threefold to around 30%. The SoftBank Vision Fund owns almost 48% of Oyo, which said that the investment is being made through RA Hospitality Holdings (Cayman).

Agarwal will engage in a $1.5-billion secondary transaction that will see him partially buy out the stakes of two early investors in Oyo — Lightspeed Venture Partners and Sequoia Capital — giving the two venture funds blockbuster returns once they receive the necessary regulatory approvals.

Agarwal, who declined to comment on the deal details, is also undertaking a $700 million primary investment in Oyo as part of the overall $2.2 billion transaction. The capital, which will finance both the debt and equity components of the deal, is being provided by a group of financial institutions, banks and family offices, sources explained. Japanese financial services giant Nomura is learnt to be part of this. Separately, existing backers are anticipated to invest an additional $800 million in the company. Agarwal’s decision to buy back Oyo shares, along with the primary investment, was first reported by ET.

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