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Oyo founder Ritesh Agarwal to buy back shares worth $1.5 billion

The largest Indian franchisee of hotels, homes and living spaces plans to buyback $1.5 billion stock from Lightspeed & Sequoia.

Oyo’s founder, Ritesh Agarwal will be undertaking a $1.5 billion stock buyback from early investors Sequoia Capital and Lightspeed Venture Partners. Ritesh and Oyo have received a green signal from the Competition Commission of India (CCI) for the same as well as pumping in an additional amount of $500 million into the company.

The approval from the nation’s antitrust regulator will permit Agarwal to facilitate an ambitious and unprecedented transaction through RA Hospitality, a Cayman-registered entity. It will witness the young bigshot ramp up his shareholding in the company he founded in 2013 to an estimated 30%.

Oyo’s valuation will double after the buyback making the firm’s worth at $10 billion compared to $5 billion previously. Agarwal will be financing the buyback through debt from Nomura and Mizuho, banks of Japan.

According to reports by ET, Ritesh said, “The company will get an additional primary infusion of approximately $1.5 billion to support our mission. This will be utilized to maintain our leadership position in India and China, strengthen our footprint in Southeast Asia, Middle East, growing our business in Europe and the US while creating a niche for our vacation homes business globally.”

Oyo will be purchasing half of Lightspeed’s current stake of 13.4% in Oyo at $1 billion. Lightspeed, with the current buyback rate, will be earning 50 times profit with the partial exit. The US-based virtual capital firm has been supporting Oyo since 2014 and has invested around $20 million in the firm. The company will also be buying the 10.21% stake from Sequoia Capital at $500 million.

Oyo- then & now

The 2013 founded budget hospitality firm was launched as a hotel aggregator platform but since then has expanded into a franchisee with a wide range of categories like coworking, cloud kitchens and much more. The firm has raised funding close to $1.7 billion from investors such as Airbnb, SoftBank Vision Fund, Greenoak Capital, Sequoia Capital, and Hero Enterprise.

Oyo has also acquired and invested in several companies to grow its business to overall accommodation ranging from holiday homes, casino hotel, and coworking spaces in around 800 cities across 74 countries. It has been trying to work its way through into student accommodations and four-star hotels as well.