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 percent without prior approval from the founder and largest minority investors, The Times of India reported.
SoftBank currently holds about 46 percent 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.
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