Ritesh Aggarwal to buy shares worth $2 bn in OYO; partial exits for Lightspeed, Sequoia

Ritesh Aggarwal will buy shares worth $2 billion in Oravel Stays Private Limited, owner of budget hotels chain OYO, in a primary and secondary transaction, pending regulatory and shareholder approvals. Aggarwal, OYO’s 25-year old founder and CEO, is acquiring the shares through Cayman Islands entity RA Hospitality Holdings.

The deal creates partial exits for OYO’s early investors Lightspeed Venture Partners and Sequoia Capital India.

Aggarwal has raised capital from banks and financial partners to finance the transaction, the company said in a statement.

“It is a very exciting time for OYO right now as we make great living spaces come alive across all corners of the world from Texas to Tokyo. Our endeavor continues to be to become the most loved hospitality brand in the coming years. I am deeply humbled and delighted to have gotten the support of all our investors, the board and above all the institutionalized financial partners that have provided the necessary financial support towards realizing this vision,” Aggarwal said.

According to an earlier report by The Economic Times, the transaction is expected to raise Aggarwal’s 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, which is estimated to hold a 45%-46% stake, is the single-largest shareholder in the company.

Earlier this month, OYO had also restricted the shareholding limit of SoftBank, to 49.99% in a possible bid to retain control. The stake acquisition exercise by Aggarwal could also be an attempt by OYO to clean up the capitalisation table. The company is gearing up to go public over the next two-three years, financial daily Mint had reported recently.

OYO is also reportedly restructuring its business into three units — India, international and technology and brand licensing, The Economic Times reported. Oravel Stays Pvt Ltd, which operates OYO Hotels and Homes, claimed last week that it was the world's third-largest hotel chain as per room count at the end of June 2019.

OYO’s other investors include Airbnb, Greenoak Capital, and Hero Enterprise.