Founder Li Taixi plans to spend $700 million to buy new shares issued by OYO, while raising $800 million in financing from Softbank Vision, Lightspeed Capital, and Sequoia India.
OYO still needs more money.
According to Tencent Technology, foreign media is cited, OYO Hotels&Homes is planning Raised $1.5 billion from founder Ritesh Agarwal, Japan Softbank Group and other investors. Among them, Li Taixi plans to spend $700 million to buy new shares issued by the company.
In July this year, OYO officially announced that Li Taixi is repurchasing old stocks and buying new shares from early investors through his RA Hospitality Holdings (Cayman), with a total value of about 2 billion Dollar. This move will increase the shareholding of Li Taixi’s from 10% to around 30%.
According to the latest news, the $700 million stock repurchase is part of the $2 billion share purchase program, and the remainder of the $1.5 billion financing is managed by Softbank’s Vision Fund, Lightspeed Capital and Red Sugi Capital (India) to provide.
OYO is an Indian hospitality startup founded in 2013 and attracts world-leading investors including Softbank Vision Fund, Lightspeed Capital, Greenoaks Capital, Sequoia Capital (India) and Airbnb. Today, the $10 billion valuation of OYO, has become second only to the digital payment company Paytm parent company One97 Communications, India’s second-highest valuation startup.
While repurchasing stocks and seeking financing, what is OYO playing?
The founder took out $2 billion to buy back shares, which was an unprecedented management buyout led by the founder in India. Generally speaking, the management’s repurchase of the company’s shares is mostly to boost morale and express long-term optimism about the company’s value. At that time, OYO was suffering from layoffs, landlord’s cancellation, and blockade by the Chinese OTA. Negative impact.
When the company will also introduce external investment, the repurchase of stocks will prevent the company’s equity from being diluted, thus maintaining a certain voice and control. According toprevious reports, once completed $2 billion Stock repurchases, Li Taixi and OYO management will become the second largest shareholder after the Softbank Vision Fund. The Softbank Vision Fund holds nearly 48% of OYO’s shares. According to the terms and conditions of the two parties, the Softbank Vision’s shareholding ratio cannot exceed 49.9% without the approval of Li Taixi, Sequoia Capital, Lightspeed Venture Capital and Greenoaks Capital.
The moment is the expansion of OYO to the US, Europe, China and other international markets. Previously, OYO had surrendered 1 million rooms worldwide, making it the third largest hotel chain in the world after Marriott and Hilton. According to official data, OYO hotels cover more than 80 cities in China, the United States, Brazil, Japan, Europe, Southeast Asia and more than 800 cities, including 200,000 rooms in India and more than 590,000 in China. In contrast, China’s China Life Group currently has a total of 420,000 rooms in the country.
This means that OYO’s share and market value growth is largely due to the Chinese market. But the problem is that aggressive expansion strategies such as low thresholds, free franchise and franchise subsidies have burned a lot of money from OYO, and the current OYO is in a tight situation where the capital chain is tight. To continue to accelerate expansion and maintain its share advantage, and in the face of pressure from China’s OTA giant Ctrip and the US group, OYO will have to take “renewing money” from outside to Dealing with more intense competition.