India’s largest hospitality company Oyo Hotels and Homes (OYO) has incorporated a clause in its charter that restricts Japanese conglomerate SoftBank from increasing its stake in the company beyond 50 per cent without prior approval from the founder and largest minority investors, The Times of India reported.
SoftBank currently holds about 46 per cent in OYO, which was founded by one of the youngest entrepreneurs in India, Ritesh Agarwal. Other key investors in the hospitality company include top US venture capital firms Lightspeed Venture Partners and Sequoia Capital.
The clause called ‘SoftBank Standstill Obligation’ was introduced in Oyo’s Articles of Association (AoA) when the company raised $250 million led by SoftBank in late 2017.
The development has been reported at a time when OYO is seeking to raise $1 billion in fresh capital from new and existing investors at a valuation of $10 billion. SoftBank has already pumped in about $1 billion in the seven-year-old startup.
A similar change in the company clause was made by ride-hailing giant Ola’s founders Bhavish Aggarwal and Ankit Bhati about two years ago to prevent SoftBank from becoming a major shareholder in the company, primarily because the Japanese investor is also a shareholder in its biggest rival Uber. The clause also restricted SoftBank from buying shares from the company’s other shareholders including New York investment firm Tiger Global.
Meanwhile, OYO is aggressively expanding its global footprint. Just yesterday, we reported that it plans to invest $50 million in Vietnam as part of an ongoing Southeast Asia expansion spree. It now operates 90 hotels in the country with 1,500 rooms under its ambit.
The Indian unicorn had also announced a $50-million investment for its foray into the Philippines earlier this year.
OYO is currently present in 800 cities in 80 countries, including the US, China, Europe, the UK, Malaysia, Middle East, Indonesia, and Japan. The company counts India and China among its largest markets.