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Ritesh Agarwal’s Cayman based firm to bring funds to Oyo

The Cayman island SPV will look to make fresh investments in the hospitality chain.

ET Bureau|
Updated: Jul 17, 2019, 01.58 PM IST
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Japanese financial services giant Nomura is in talks with Ritesh Agarwal to provide him with the required debt, which could be up to $1.5 billion.
NEW DELHI: Ritesh Agarwal, group CEO of Oyo Hotels & Homes, has set up a Cayman Islands-registered entity, RA Hospitality, which will look to make fresh investments in the SoftBank-backed hospitality chain, as well as undertake buybacks from existing investors.

According to a notification made to the Competition Commission of India, which was accessed by business signals provider Paper.vc, RA Hospitality has been named as the acquirer, while Oravel Stays, the parent company of Oyo, has been named as the target.

ET reported in its July 9 edition that Agarwal was preparing to undertake a potential $1.5 billion share buyback from early investors Sequoia Capital and Lightspeed Venture Partners to bulk up his ownership in the company that he founded in 2013.

If talks fructify, the subsequent transaction could see the 26-year-old raise his stake in Oyo to around 30% from the current 10%. This may go up to as much 32-33%, including the stakes held by the management and employees, ET had reported.

Japanese financial services giant Nomura is in talks with Agarwal to provide him with the required debt, which could be up to $1.5 billion. Agarwal is likely to pledge his shares in the process. An additional primary capital of about $500 million is also likely to take place. Lightspeed owns 13.4% of Oyo and has invested Rs 158 crore, while Sequoia has ploughed in Rs 165 crore and holds a 10.24% stake, according to Paper.vc. It is as yet unclear if RA Hospitality, a special purpose vehicle, also includes other entities apart from Agarwal.

“This structure is very similar to what Bhavish Aggarwal and Ankit Bhati had created in late 2018 when they created an entity in order to up their stake in Ola, although that was primarily used for secondary share purchases. It seems that this entity (RA Hospitality) has been created to put in new money into the company. Any refinancing that Agarwal does is likely to be for secondaries only,” according to a research note from Paper.vc.
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