The cost of acquisition of shares of founder and CEO, Ritesh Agarwal, is the highest in Oyo Hotels & Homes—thanks to the $2 billion investment round in 2019 and a series of buybacks in 2020. The 2019 deal was a rare instance where the founder of an Indian startup had bought back a stake from early investors before an IPO.
Of the total 33.15% that Agarwal owns in Oyo, a chunk (24.94%) is held through RA Hospitality Holdings (Cayman) at ₹101.23 a share, while the balance of 8.21% is the only tranche of holding that has come cheap at ₹0.01 per share.
In comparison, Softbank’s cost of acquisition works out to ₹34.81 a share, for its 46.62% pre-IPO stake. In 2018, Oyo had also raised $100 million from Cayman Islands-based A1 Holding Inc—an entity controlled by Singapore's ride-hailing firm Grab—whose cost of acquisition is ₹63.52 a share. Similarly, China Lodging Holdings (HK) owns 1.81% at ₹63.52 a share, while Sunil Kant Munjal—who had invested along with SoftBank in a Series D round in 2017—owns 5.9 crore shares at ₹17.73 a share.
The hotel-booking startup has filed its draft papers with the market regulator for an ₹8,430 crore ($1.1 billion) initial public offering—comprising a fresh issue of equity shares aggregating up to ₹7,000 crore and an offer for sale (OFS) of ₹1,430 crore. The OFS comprises stakes of SoftBank, Grab, China Lodging, and Global IVY Ventures.
The reason for Agarwal’s high cost of acquisition is because in 2019 in a $2 billion transaction, that was financed by global banks, RA Hospitality Holdings bought back 655 equity shares from Lightspeed Venture Partners at ₹50,65,152 a share and 257 equity shares from Sequoia Capital at ₹43,54,962.93 a share, besides 13,169 shares via a private placement in the same year at ₹37,53,444.31 a share. The following year, RA Hospitality also bought back 75 shares from Anuj Tejpal—global chief commercial officer at Oyo and one of the founding members—at ₹37,53,444.31 a share, besides buying 388 shares from the Oravel Employee Welfare Trust at ₹38,11,076.22 a share.
Following a bonus issue in September 2021 in the ratio of 25 equity shares (₹10 each) for every 160 equity shares, RA Hospitality got additional 2,273 shares. On September 10, the equity shares were split into shares of ₹1 each, post which additional bonus shares of 3,999 shares—for every 1 share held—were issued to RA Hospitality.