OYO founder to increase stake through Cayman-based entity

Ritesh Aggarwal, the founder of Gurugram-based hospitality chain OYO Hotels and Homes, is increasing his stake in the company through RA Hospitality Holdings, a Cayman Islands-based entity.

RA Hospitality has proposed to acquire shares of Oravel Stays Private Limited, the parent company of OYO, according to a submission to the Competition Commission of India (CCI).

“The proposed combination involves a) subscription to equity securities of Oyo by RA Co and b) the acquisition of part of the equity securities held by certain existing shareholders of Oyo,” the note said.

However, it did not mention the size of the stake it proposes to acquire through these two modes.

E-mail queries sent to OYO seeking more information in this regard did not elicit a response at the time of filing this report.

Ritesh Agarwal is in the midst of buying back shares worth $1.5 billion (Rs 10,298 crore at the current exchange rate) from early investors Sequoia Capital and Lightspeed Venture Partners, The Economic Times reported. Should the deal go through, it is expected to raise his shareholding to around 30% from 10%. Along with the stakes of the management and employees, the holding will increase to 33%.

The transaction will also make Agarwal the second-largest shareholder of OYO. SoftBank holds a 45%-46% stake in OYO, making it the single-largest shareholder in the company by various estimates.

OYO has also restricted the shareholding limit of SoftBank, its largest investor, to 49.99% in a possible bid to retain control.

The stake acquisition exercise could also perhaps be viewed as an attempt by OYO to clean up the capitalisation table. The company is gearing up to take the public route over the next two-three years, Mint reported.

OYO is also reportedly restructuring business into three units — India, international, and technology and brand licensing, The Economic Times reported.