- Oyo Hotels and Homes founder and CEO Ritesh Agarwal is investing $2 billion to buy back stake in the company
Ritesh Agarwal — the founder and CEO of Oyo Hotels and Homes — is investing $2 billion to buy back stake from the company’s early investors Lightspeed Venture Partners and Sequoia India.
The purchases are being made through RA Hospitality Holdings (Cayman). And the transaction will have Agarwal’s stake in Oyo go from nearly 10% to 30%, according to Livemint’s sources.
And the company’s valuation is now around $10 billion. Sequoia Capital and Lightspeed Venture Partners are going to see returns of more than $500 million each from the partial stake.
Sequoia Capital had a 10.24% stake in Oyo and Lightspeed has a 13.4% stake. However, it is unknown how much they sold. Agarwal’s investment is being backed by global institutional banks and his financial partners. And it is subject to regulatory and shareholder approvals.
“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,” said Agarwal.
Oyo Hotels and Homes has seen a 4.4x year-on-year revenue growth in June with 1 million rooms under management across hotels and homes. And it has over 200,000 rooms in India.
“It’s been five years since Sequoia India first partnered with Ritesh and his team. Today, our footprint stands at 1 million rooms across India, China, South-East Asia, Europe and, now, the US. This is the kind of stuff startups and ventures investing dreams are made of. We remain committed to supporting this world-class management team, as they continue to create living spaces across the world,” added Mohit Bhatnagar — managing director at Sequoia Capital India Advisors.
Oyo recently unveiled that it is the world’s third largest hotel chain based on room count. And Oyo reportedly has a balance sheet of $1.5 billion. The equity buyback is reportedly part of a larger fundraising plan, which includes an IPO within the next few years.
“The buyback is thus a part of the plan to have SoftBank, the founder and one more investor,” explained Paper.vc founder Vivek Durai via Livemint. Currently, SoftBank is Oyo’s largest shareholder with more than a 45% stake.
Agarwal had launched Oyo when he was a teenager and traveled around India with a small budget. Staying in hotels and guest houses with a wide variety of standards inspired him to launch the company.
Oyo helps hotels upgrade the furniture, bedding, and bathroom utilities. And Oyo also provides sheets and toiletries along with staff training.
After receiving housekeeping approval, the hotels receive a bright red Oyo sign to hang up. And Oyo keeps around 25% of the booking revenue.
