In an unprecedented move in the world of new-age startups, Oyo Hotels & Home founder Ritesh Aggarwal is in talks to buy back shares worth $1.5 billion from investors such as Sequoia Capital and Lightspeed Venture Partners to bump up his ownership, the Economic Times reported on Monday.
Quoting sources, the newspaper stated that Aggarwal is already in talks with the investors as he’s looking to bump up his stake in the company to 30% from the existing 10%.
The buyback is likely to be financed by banks and financial institutions from Europe, India, and Japan through a $2 billion secured debt, the sources added.
As part of this transaction, Oyo is likely to be valued at $10 billion with a mix of primary and secondary transactions.
“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.
Post this move, the Oyo founder will emerge as the second largest shareholder of the company after Japanese group Softbank Vision Group which holds a whopping 48% of the company.
According to the company’s clauses, the Japanese investor can’t increase their stake beyond 49.9% before seeking approval from Aggarwal and a clutch of early investors. However, this is third such attempt by an Indian founder to protect their company from being taken over by Softbank after Ola and Snapdeal undertook significant recapitalization efforts to maintain the founder’s control.