Over 500 employees and former employees of the IPO-bound hospitality chain startup – OYO have exercised their stock options grants to buy around three crore shares of the company, according to regulatory filings. These shares were bought by employees and alumni through the exercise of their vested Employees’ Stock Option Plan (ESOPs), the filing said.
When the implications of COVID-19 caused pay cuts and layoffs, the Gurgaon-based startup provided heavily discounted ESOPs to both current and former employees. Based on OYO’s latest valuation of $9.6 billion when it raised $5 million from tech conglomerate Microsoft in August last year, the overall value of the shares owned by current and former employees of Oravel Stays Ltd., which controls OYO, would be around Rs 330 crore.
OYO had increased its ESOP pool by 41 percent, and it is expected that about 80 percent (~1,200 employees) of current OYO employees had been awarded ESOPs. It had 5,130 employees globally as of March 31, 2021, with India accounting for 70.9 percent of the total workforce. The company filed draft papers with markets regulator Securities and Exchange Board of India (SEBI) in October last year to raise Rs 8,430 crore through an initial share sale.
According to the draft red herring prospectus (DRHP), the proposed Rs 8,430 crore (~$1.16 billion) initial public offering (IPO) includes a primary issue of equity shares worth up to Rs 7,000 crore and an offer-for-sale from existing investors worth Rs 1,430 crore. SoftBank Group will offload stakes worth Rs. 1,328.53 crore, will release shares worth Rs. 51.6 crore. Huazhu Hotels, which made an investment in 2017, will reportedly be selling its stakes in OYO for around Rs. 23.13 crore. Sunil Munjal’s family firm, the Hero Group, will liquidate a portion of its stake worth Rs. 26.71 crore. OYO founder Ritesh Agarwal will not sell any of his shares.
Last month, the IPO-bound hospitality chain startup announced the appointment of Rajnish Kumar, ex-chairman of the State Bank of India (SBI), as its strategic group advisor. While in October 2020, OYO announced the elevation of Ankit Gupta as CEO of its Franchise & Frontier Businesses in India. He will continue to report to Rohit Kapoor, CEO of OYO India and Southeast Asia.
Talking about financials, it posted a 70 percent contraction in losses at Rs 3,943.8 crore in FY21 compared to the loss of Rs 13,122.77 crore in FY20, due to a significant decrease in expenses. OYO’s total expenses were Rs 6,936.07 Crore in FY21, compared to Rs 22,800.12 Crore in FY20. Due to multiple layoffs, its employee benefits expenses fell by 63 percent to Rs 1,742.12 crore in FY21, compared to Rs 4,765.28 crore in FY20.