Agarwal reportedly invests $693m in OYO in protracted deal

India: OYO founder and group CEO, Ritesh Agarwal, has invested an estimated $693 million in the company, according to online publication Inc42. 

Once the transaction has been officially completed, it will become the richest cashout in India’s startup ecosystem. Agarwal is expected to retain an 18.03 per cent share of the company, up from the current 9.43 per cent.

Reports first emerged back in July that the CEO was seeking to buy back his stake in OYO, which would have included buying a reported $1.5 billion worth of shares from Sequoia and Lightspeed. 

It was then announced in October that Agarwal’s RA Hospitality Holdings would inject approximately $700 million as primary capital in a Series F round in OYO. In a media statement, the company said the funds would be partially diverted towards driving growth in the United States and strengthening its vacation rental brand presence in Europe. 

Now, it has emerged that Lightspeed Venture Partners and Sequoia Capital India have sealed their transaction to sell an estimated 15 per cent stake in OYO to Agarwal for $1.5 billion. 

The deal means that the company’s valuation will double to around $10 billion, with Agarwal receiving a loan from Japanese banks Nomura and Mizuho to finance the buyback. 

American venture capital firm Lightspeed has been backing OYO since its launch in 2014, injecting some $28 million in the company since then. 

Sequoia Capital has invested around $25 million in OYO and will reportedly retain a stake of between four and five per cent in the hospitality company. 

Operating a portfolio of over 35,000 hotels and 125,000 vacation homes, as well as more than 1.2 million rooms in 80 countries and 800 cities worldwide, OYO has diversified into various travel accommodations in recent times, including short-term rentals, casino hotels and co-working stays. It seeks to cater for budget travellers as well as those wanting corporate stays.

After consecutive years of losses, OYO says the group is aiming for overall profitability by 2022. 

For more information, visit the OYO website here.