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OYO Rooms raises fresh money through rights issue

oyo rooms-cmn1

Budget hotel aggregator OYO Rooms is planning to raise Rs 413 crore by a proposed rights issue of shares to its current shareholders, according to the documents it filed with the Registrar of Companies. The company is also planning to buy back shares worth Rs 60 crore from some of its investors. The Economic Times reported the story first.

The company said in its filing that “ The Buy-back is being undertaken by the Company to provide liquidity to the Shareholders. Additionally, the Buy-back would result in enhancing shareholders’ confidence.”

It is worth noting that OYO has been finding it difficult to get new investors and VentureNursery, its first investor, was looking to exit the company back in April 2016.

The ET report said the money will be used by OYO to expand ‘OYO Flagship,’ under which it leases hotels and guest houses, departing from its aggregator model. The service was launched in May 2016. It also added that the company is planning to tie up with state governments for categories such home stays and bed and breakfast.

Financials

The company had profitable unit economics during the final quarter of the financial year ending 2016. It saw a 15x year-on-year growth with 2.3 million booked room-night transactions in Q1 Jan-Mar 2016, getting 95% of the traffic from its app, website and call-centre. Gurgaon, Delhi and Hyderabad were the most lucrative cities of Oyo.

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Oravel stays net profit fy15

The financial year of 2014-15 wasn’t impressive as far as profits are concerned. The company posted losses worth Rs 20.79 crore for the financial year ending 2015, a staggering increase from Rs 56.25 lakhs from the year before.

Oravel stays financials fy15]

It’s revenues increased from Rs 50.75 lakhs in 2013-14 to Rs 2.41 crore in 2014-15 while expenses shot up to 32 crore in 2014-15 from 1.07 crore the year before.

OYO’s top five shareholders

Oyo shareholding

Funding

In August 2015, OYO Rooms raised $100 million in a funding round led by SoftBank group and participation from existing investors Greenoaks Capital, Sequoia Capital and Lightspeed India. In March 2015, it raised $20 million in a funding round led by Greenoaks Capital and other existing investors.

Recent developments at OYO

– In June 2016, OYO Rooms launched ‘OYO for Business’ for corporates and business travellers, allowing companies to manage travel expenses for employees and set budgets for rooms.
– It had tied up with PayPal in March to allow payments from international customers, two months after it had started its operations Malaysia with plans to enter Africa, South America and Southeast Asia.
– The company acquired its rival Zo Rooms in February 2016, ending months of speculation.

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Related developments budget hotel aggregator space

– FabHotels raised $8 million in funding from Accel Partners, RB Investments Mohandas Pai’s Aarin Capital and Qualcomm Ventures in a Series A round in June 2016.
– In February 2016, Cleartrip’s former head of hotel stays Rakesh Rana launched a budget accommodation company called Comfy Stays which offers guest houses and aggregates service apartments.
– In November 2015, Online travel aggregator MakeMyTrip (MMT) had launched Value+, a brand of budget hotel rooms, with rooms starting at Rs 1,000 per night.

Excerpts from the OYO’s filing

SPECIAL BUSINESS:-
ITEM NO.1
Buy Back Of Equity Shares From The Shareholders Of The Company
To consider and if thought fit, to pass, with or without modification(s), the following resolution as a 
Special Resolution :
RESOLVED THAT pursuant to the provisions of Article 9.3 of the Articles of Association of the Company and the provisions of Sections 68 and 69 and all other applicable provisions, if any, of the Companies Act, 2013, as amended (“Companies Act“) and the Companies (Share Capital and Debentures) Rules,2014(“Share Capital Rules“) to the extent applicable including any amendments, statutory modifications or re-enactments, for the time being in force and, subject to other approvals, permissions and sanctions as may be necessary and subject to such conditions  and modifications,if any, as may prescribed or imposed by the appropriate authorities while granting such approvals, permissions and sanctions, which may be agreed by the board of directors of the company (“Board“), the consent of the members be and is hereby accorded for buy-back by the Company of its fully paid-up equity shares of INR 10/- (Indian Rupees Ten Only) each (“Equity Shares“) not exceeding 1,863 (One Thousand Eight Hundred Sixty Three) Equity Shares ( Representing 8.21%(Eight Point Two One percent) of the total number of Equity shares of paid-up Equity Share Capital of the Company) at a maximum price of INR 3,20,926.55/-(Indian Rupees Three Lakh Twenty Thousand Nine Hundred  and Twenty Six and Fifty Paise Only) per Equity Share payable in cash for an aggregate amount of INR 59,78,86,162.65/-(Indian Rupees Fifty Nine Crores Seventy Eight Lakhs Eighty Six Thousand One Hundred and Sixty Two and Sixty Five Paise Only), which is less than 25% (Twenty Five Percent) of the fully paid-up Equity Share capital and free reserves as per the unaudited accounts of the Company as at December 31,2015(“Buy-back“).

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INCREASE AND RECLASSIFICATION OF AUTHORIZED SHARE CAPITAL OF THE COMPANY AND ALTERATION OF MEMORANDUM OF ASSOCIATION

To consider and if thought fit, to pass, with or without modification(s), the following resolution as an 
Ordinary Resolution:
RESOLVED THAT pursuant to the provisions of Section 13, 61 1(a) and 64 and other applicable provisions of the Companies Act, 2013, the authorised share capital of the Company be increased and reclassified from existing Rs. 44,00,000/- (Rupees Forty Four Lakhs only) to Rs. 54,50,000/- (Rupees Fifty Four Lakhs and Fifty Thousand only).

The Authorised Share Capital of the Company is Rs. 54,50,000/- (Rupees Fifty Four Lakhs and Fifty Thousand only) divided into:

a) 40,000 (Forty Thousand) Equity Shares of Rs. 10/- (Rupees Ten only) each;
b) 10,000 (Ten Thousand) Series A Compulsory Convertible Preference Shares of Rs. 10/- (Rupees Ten only) each;
c) 11,500 (Eleven Thousand Five Hundred) Series A1 Fully and Compulsory Convertible Cumulative Preference Shares of Rs. 100/- (Rupees Hundred Only) each;
d) 10,500 (Ten Thousand Five Hundred) Series B Fully and Compulsory Convertible Cumulative Preference Shares of Rs. 100/- (Rupees Hundred Only) each;
e) 17,000 (Seventeen Thousand) Series C Fully and Compulsory Convertible Cumulative Preference Shares of Rs. 100/- (Rupees Hundred Only) each and;
f) 10,500 (Ten Thousand Five Hundred) Series C1 Fully and Compulsory Convertible Cumulative Preference Shares of Rs. 100/- (Rupees Hundred Only) each

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