Exclusive: Oyo adds Rs 1,054 Cr to its ESOP pool

The significance of employee stock options or ESOPs across the startup ecosystem has increased multifold in the past two-three years with the investment of sweat and loyalty valued more over salary by both employees and founders. 

Besides allocation and expansion of their ESOP pool by many startups, some like Paytm, Byjyu’s Swiggy, Zomato and Zerodha have also allowed their employees to encash, sharing wealth and spreading cheer among those who shared their journey with their respective companies.

Keeping up with the trend, hospitality firm Oyo has expanded its ESOPs pool and added 2,700 shares to its existing employee stock options under ‘ESOP Plan 2018’. 

Regulatory filings show that the company passed a special resolution to increase its existing pool from 8,328 options to 11,028 stock options by adding 2,700 options worth nearly Rs 1053.87 crore or $143.4 million. Each option is equivalent to 1 equity share. 

As per Fintrackr’s estimates, Oyo’s “ESOP  Plan 2018” is now valued at nearly Rs 4,304.5 crore or $585.6 million and with this latest addition, the company has increased its stock option pool by 32.4%. The increased ESOP pool now constitutes around 7.35-7.4% of the total stake in the company. 

The old ESOP plan consisted of 8,328 stock options that were worth Rs 3,250.6 crore or $442.30 million. 

Oyo has confirmed the expansion of ESOPs pool. “Oyo’s last series F funding price is $52,643 and taking that into account, the worth of the additional pool of 2,700 stock options shall be approximately $143 mn or Rs 1,050 Crore,” said the company's spokesperson.

Oyo’s current valuation stands at $7.7 billion, as it was during its Series F tranche in March 2020. The company had raised $807 million as part of its $1.5 billion fundraise from SoftBank and RA Hospitality in that transaction. 

Post Series F, founder Ritesh Agarwal held 8.03% stake individually whereas RA Holdings has 24.55% stake in the company. The firm had also allotted ESOPs worth $20 million to the employee’s welfare trust.

Entrackr had exclusively reported the allotment to the trust in May.

While the regulatory filings did not mention any details for a fresh allotment to employees from the ESOP pool, the move is likely to up the confidence of its workforce that has been facing unprecedented stress due to pandemic. 

Besides consolidating teams across brands such as TownHouse, Oyo Life, Powerstation, Workflow and cloud kitchens, and laying off employees, Oyo had recently extended the furlough period of its Indian employees, which was to end in August, by six more months. 

The move was an outcome of continuing woes for the travel and hospitality sector hurting badly from the aftermath of a lockdown, severe travel restrictions and strict protocols to limit the spread of the coronavirus.