Oyo to use fresh funds for ‘enhanced business plan’ and global push

On Thursday, ET reported that Oyo received shareholder approval for raising ₹416.85 crore through preference shares at an extraordinary general meeting (EGM) held on June 18.

The shareholders also approved Oyo’s plan to increase authorised share capital to ₹1,341.14 crore from ₹901.14 crore.

In the company’s EGM notice, which ET has reviewed, the ‘object of offer’ section states that the fundraising is for supporting the company’s enhanced business plan, besides global expansion (including acquisitions) and other business-related activities.

As per the scrutiniser’s report seen by ET on Friday, 99.99% of the voting shareholders were in favour of altering and increasing the authorised share capital of the company to ₹1,341.14 crore. Basis this approval, an additional 440 million Series G compulsory convertible cumulative preference shares (CCCPS), with a face value of ₹10 each, will be added to the company’s authorised share capital.The shareholders (99.99%) were also in favour of issuing 143.7 million Series G CCCPS shares to InCred Wealth and Investment Services on a private placement basis.These preference shares, valued at ₹29 each, will raise ₹416.85 crore for Oyo.According to the scrutiniser’s report, the calculation of voting rights for the equity and preference shareholders is based on 1,358,330,106 equity shares and 1,182,680 preference shares, translating into 22.31% votes for equity shares and 77.69% votes for preference shares, respectively.

People familiar with matters at the company said shareholder approval to increase Oyo’s authorised share capital to ₹1,341.14 crore provides the company with “greater flexibility” to issue new shares as it pursues opportunities.

As per the EGM notice, the issued equity share capital is expected to get diluted by 2.11% on a fully diluted basis, upon conversion of preference shares and without taking into consideration the adjustment of anti-dilution.

“However, the dilution is subject to certain adjustments as per the terms of the issuance of the relevant preference shares, at the time of conversion of the preference shares of the company,” the notice stated.

Earlier this month, Oyo founder Ritesh Agarwal had said in a social media post that the last fiscal year was the company’s maiden net profitable year and that it posted a profit after tax (PAT) of nearly ₹100 crore in financial year 2024, also marking the eighth consecutive Ebitda-positive quarter for the company. He also said that the company has a cash balance of ₹1,000 crore.

“Global credit rating firm Fitch has also taken note of our improved performance and strong cash flows, upgrading our credit rating,” Agarwal said. “I see growth ahead not just in India with emerging travel trends such as premiumisation, spiritual travel, business travel and conferences, destination weddings, but also in our other key markets of Nordics, Southeast Asia, the US and the UK,” he added.