Oyo's Ritesh Agarwal aims to restrict SoftBank's stake in the company by buying back shares
According to sources, Oyo Founder Ritesh Agarwal is believed to be buying back shares from some of his early investors. However, the percentage of the revised equity hasn't been confirmed.Sindhu Kashyaap
Hospitality major Oyo has been in the news for the past couple of weeks for several reasons. However, this time, it is in news not with a focus on expansion, but because its Founder, Ritesh Agarwal, is said to be buying back stake from a few early stage investors.
While media reports have suggest it to be LightSpeed Ventures and Sequoia India, sources are yet to confirm the same.
"There are talks, but these are in its primary and initial stages," said a source in the know of the matter. The sources are also yet to confirm the percentage of stake that Ritesh is looking to buy back. However, it is believed to be somewhere between five and 10 percent. If Ritesh is able to buy back these shares, his stake in the company will be close to 20 percent. He currently owns 10 percent of Oyo.
Ritesh is one of the few founders in India who owns a double-digit stake in the company he founded. While sources maintain that Ritesh currently is only in talks, and the amount needed to buy the additional equity is not known, reports suggest that this is somewhere close to $2 billion. Ritesh is also said to be in talks with a few overseas funds to secure debt for the same.
This isn't the first time a startup founder is looking to buy back stake in the company he/she founded. In 2017, Ola made a rather bold move. The Articles of Associations (AoA) then filed by the company suggests that the founders are strengthening their rights and restricting those of SoftBank’s, the ride-hailing unicorn's largest stakeholder.
Interestingly, Ritesh's current clause is similar. Sources say if the talks pan out, the founder will be the second-largest stakeholder in the company after SoftBank Vision Fund. The clauses are also said to state that the Japanese conglomerate cannot increase its stake in the company beyond 49.9 percent without approvals from Sequoia Capital, Greenoaks Capital, LightSpeed Ventures, and Ritesh Agarwal.
Ola co-founder Bhavish Aggarwal was the first in the Indian startup ecosystem to do so, showing signs of maturity from the founders.