Ritesh Agarwal plan to buy back OYO shares worth $1.5 Bn gets CCI nod

OYO's founder Ritesh Agarwal ambitious $1.5 billion stock buyback plan has got a green signal from the Competition Commission of India (CCI).

The approval will allow OYO's founder to facilitate a transaction through freshly formed Cayman-based RA Hospitality Holdings, explicitly devised to facilitate this primary and secondary transaction on behalf of Agarwal.

The transaction would take the valuation of OYO to $10 billion, whereas Agarwal current 9% stake would increase to over 30%.

"The company will get an additional primary infusion of approximately $1.5 billion to support our mission," an ET report quoted Agarwal as saying after getting the approval.

He further added that the transaction would help OYO maintaining its leadership position in India and other overseas markets including Southeast Asai, Middle East, US and Europe.

The stock buyback plan will also give the biggest cashout to venture funds Lightspeed Venture Partners and Sequoia Capital.

Lightspeed, which holds around 13% stake (for $20 million investment) in OYO, is set to make around $1 billion from the sale of its half stake. Whereas Sequoia Capital, which has around 10% stake (for $27 million investment), is slated to make about $500 million from the partial stake sale.

Earlier in July, Entrackr had reported that three Japan-based banks- Nomura, Mizuho, and one unidentified bank, will fund Ritesh Agarwal’s $2 billion loans, out of which $1.5 billion will be used for buyback of Sequoia, Greenoaks, and Lightspeed’s shares and $500 million for primary investment purposes.

Nomura and Mizuho are the principal lenders in this deal.

The repayment is expected in three years when OYO plans to hit IPO. The hotel chain expects its valuation to go up to $18 billion by then. This would take Agarwal's stake worth to $4.8 billion, through which he plans to repay the loan with interest.