Oyo founder, Ritesh Agarwal in talks to buy back $1.5 billion shares
Oyo founder, Ritesh Agarwal is in the midst of buying back shares from early investors Sequoia Capital and Lightspeed Venture Partners to bulk up his ownership, said three people familiar with the matter.
The move will help Agarwal raise his stake to around 30% from the current 10%. This may go up to as much 32-33%, including the stakes held by the management and employees.
Oyo is expected to be valued at around $10 billion in what will be a mix of secondary and primary transactions, they said.
In an emailed response to ET’s queries, an Oyo spokesperson said, “As a company policy, we do not comment on industry speculation.” Lightspeed and Sequoia didn’t respond to queries.
Ritesh Agarwal is going to pledge his shares in the process of raising debt, said another source.
“While Agarwal will buy $1.5 billion worth of shares from Sequoia and Lightspeed, another $500 million will come in the form of primary capital. The primary part of the deal may see existing investors also pitch in,” said a person privy to the details. The $500 million in primary capital will go into the company’s coffers, he added.
Ritesh Agarwal, along with the management, will emerge as the second-largest shareholder after SoftBank Vision Fund, which owns almost 48% of the company.
As per clauses drawn up by Oyo, the Japanese group cannot increase its ownership beyond 49.9% without receiving approvals from Agarwal, Sequoia, Lightspeed and Greenoaks Capital.
SoftBank had bought back some shares from Greenoaks as part of a secondary transaction a few months ago, said sources in the know.