Oravel Stays, the parent company of hospitality chainOyo Hotels & Homes, has received a capital infusion of about $807 million (around Rs 5,976 crore) from two of its backers, SVF India Holdings and RA Hospitality, the Ritesh Agarwal-controlled investment entity, as part of its ongoing $1.5 billion funding round.
In regulatory filings with the Registrar of Companies, and accessed by company research platform Tofler, the Gurugram-headquartered company has allotted a total of 15,325 Series F compulsorily convertible cumulative preference shares (CCCPS) to the two entities, at a price of $52,643.22 per share.
SVF India Holdings Limited has invested about $507 million, while RA Hospitality Holdings has put in about $300 million. When contacted, an Oyo spokesperson confirmed the fund infusion.
“This is a key development for Oyo Hotels & Homes, and additional funds will help the business achieve its strategic objectives for 2020, which include accretive and sustainable growth, operational excellence and investment in corporate governance and training,” the spokesperson told ET in an email.
The capital infusion is part of Oyo’s larger ongoing $1.5 billion financing round, which ET reported on November 25.
“The proceeds will be utilised towards strengthening our focus on customer experience improvements, investments in R&D and those that improve the partner experience across all touch-points,” the spokesperson said.
The development follows a statement by the SoftBank-backed company in October, according to which Agarwal will invest $700 million into the company he founded in 2012, with the rest coming in from its largest investor SoftBank and other unnamed investors.
As per the latest set of documents filed by the company, SVF India Holdings Ltd and RA Hospitality Holdings, both of which are Cayman Islands-registered entities, have been allotted 9,626 Series F CCCPS and 5,699 Series F CCPS, giving them stakes of 46.42% and 23.74%, on a fully-diluted basis, respectively.
The shareholding of both investors are critical for the company, given the existence of a clause, termed the SoftBank Standstill Obligation, in the company’s charter that was introduced in 2017, and which restricts the Tokyo-headquartered strategic holding company, Oyo’s largest institutional stakeholder, from increasing its ownership from 49.99%.
The clause specifically requires that SoftBank, if it wants to increase its shareholding in Oyo, get the permission of Agarwal, and early investors, such as Sequoia Capital, Lightspeed Ventures and Greenoaks Capital, provided the latter have shareholding above a certain limit.
Digital publication Entrackr was the first report on the development on Tuesday.
This also comes at a time when the hospitality chain has been undertaking significant job cuts, across its two home markets, India and China, as it struggles to recover from Covid-19 pandemic in the world’s second-largest economy, as well as rein in costs, while shoring up its bottom-line in the former.
Leave a Reply