The report noted that after the buyout, Agarwal will see his stake in Oyo increase to 30 percent, which would make him the second-largest stakeholder.
The Competition Commission of India (CCI) has approved a buyback of shares worth $1.5 billion sought by Oyo founder Ritesh Agarwal along with an additional $500 million investment, according to a report by Economic Times.
Agarwal will be buying back partial stakes of early investors Lightspeed Venture Partners and Sequoia India.
Agarwal told the publication that the proceeds from the buyback will be used by the hospitality company to maintain its leadership position in India and China, strengthen Oyo’s footprint in Southeast Asia, the Middle East, and its business in Europe and the US.
After the buyback, Agarwal's stake in Oyo is expected to increase to 30 percent, making him the second-largest stakeholder. Japan’s SoftBank Vision Fund is the largest stakeholder with 48 percent. It cannot increase its stake in Oyo beyond 49.9 percent without the approval of Greenoaks Capital, Lightspeed, Sequoia, and Agarwal, the report pointed out.
The report also noted that Agarwal will carry out the buyback through debt from Japanese banks Nomura and Mizuho. Following the completion of the buyback, Oyo’s earliest investors, Lightspeed Venture Partners and Sequoia Capital, may be part of the richest cash out seen in the startup ecosystem so far.
According to the report, Oyo’s current valuation is at $4.5-$5 billion after its last funding round. It has so far received $1.6 billion in equity funding. Following the completion of the buyback of shares, the report noted that Oyo could target a valuation of $10 billion.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
