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Oyo Secures Shareholder Approval for Fresh Funding Through Preference Shares

OYO Shareholder
Preeti Bali / 9:04 am / June 24, 2024

Travel technology giant Oyo has received a resounding vote of confidence from its shareholders, securing approval to raise ₹416.85 crore through the issuance of preference shares. This decision, passed by a near-unanimous majority (99.99%) at an extraordinary general meeting (EGM) held on June 18th, signifies a significant step forward for the company.

The move not only allows Oyo to bolster its financial resources but also increases its authorized share capital from ₹901.14 crore to ₹1,341.14 crore, providing greater flexibility for future financing endeavors.

Targeted Issuance of Preference Shares

Oyo plans to issue 14.37 crore Series G CCPs (compulsory convertible cumulative preference shares) through a private placement. These shares, valued at ₹29 each, will be acquired by InCred Wealth, generating a total of ₹416.85 crore for the company.

Preference shares, as defined by Investopedia, grant shareholders preferential rights to dividends compared to holders of common stock. This strategic approach reflects Oyo’s commitment to attracting investor confidence and solidifying its financial foundation, particularly in a currently demanding market environment.

Milestone Reaffirms Investor Confidence

An anonymous source, speaking to the Economic Times, emphasized the significance of this EGM: “This successful vote signifies a critical milestone for Oyo. The company’s ability to raise capital and restructure its financial base underscores investor confidence in its long-term vision and future prospects.”

Strategic Shift Towards Private Funding

This approval comes at a pivotal juncture for Oyo, as the company reportedly seeks an additional ₹1,000 crore in funding from family offices. Prominent figures like Ramesh and Rajeev Juneja (Mankind Pharma promoters), stock market expert Utpal Sheth, and Anand Jain (Reliance Industries) are said to be potential backers in this round.

Furthermore, Oyo’s recent withdrawal of its initial public offering (IPO) application indicates a strategic shift towards private funding mechanisms in the short term.

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