Hoteliers Accuse Oyo Rooms Of Cheating; Ritesh Agarwal Buy Backs $1.5 Bn Of Shares, Raises His Own Stake
OYO Hotels and Homes has once again been engulfed by controversy, as a hotel owner’s association has filed a formal written complaint about the number one startup in India.
Adding masala to the already spicy series of events, OYO has assured that no such complaint has been made at all!
Moreover, the founder of OYO, Ritesh Agarwal is all set to buy back shares worth $1.5 billion from some of the investors who put their money at an early stage of the startup.
Why have the hotel owners complained against OYO? What might be the motive of the founder of OYO behind this buyback plan? Find out right here!
Hotel Association Complaints Against OYO; OYO Denies Complaint
A written complaint has been filed with the City Police Commissioner Bhaskar Rao against OYO by a hotel association in Bengaluru. The complaint accuses OYO of cheating and adapting to sneaky ways to gain extra money.
PC Rao, the association president of the Bruhat Bengaluru Hotels Association said, “There are many issues with OYO. Many of our association members have moved out of their service but still, we have not got our payments. In some cases, there are delayed payments and in some cases, there have been no payments at all.
This has happened not long after OYO has faced protests and boycotts from restaurant associations in Kochi, to which the Delhi High Court had ruled in favour of OYO. OYO has also faced protests and boycotts in Mumbai and other cities too.
However, OYO has blatantly denied such accusations and said that no such complaint has been made at all!
The spokesperson of the company has said that this an intentional effort by ‘vested groups’ to cause much ado about nothing, whereas, actual partners of OYO, who bring value to the startup, get together with OYO and solve matters on hand. They are ‘focused on finding ways to improve customer experience and thereby their occupancy and profitability.’
OYO Founder Ritesh Agarwal Plans $1.5 Billion Buyback
As per fresh news pouring in, OYO founder Ritesh Agarwal is planning to buy back shares worth $1.5 billion. He plans to buy them back from the initial investors, Sequoia Capital and Lightspeed.
He is also looking to invest $500 million in OYO.
What’s confusing is that he plans to loan the money required from other investors, such as Cayman Island entity RA Hospitality Holdings, which will be funded by Japanese banks Nomura and Mizuho.
This will make Agarwal the 2nd biggest stakeholder (30%) in the company after Softbank (48%), and will give him a much bigger and stronger control over his own company, which seems to be the primary motive behind this
The Competition Commission of India (CCI) has also approved Ritesh Agarwal’s buyback plan.
This is an unprecedented situation in the Indian startup ecosystem, wherein a founder has taken a loan from investors to buyback shares from other investors.
Maybe it shows the aggressive stand of Ritesh and his desire to have the ultimate control over his own company.
We will keep you updated, as we receive more details!