Oyo Receives Shareholder Approval to Raise Rs 417 Crore Via Preference Shares
- ByStartupStory | June 21, 2024
Travel tech unicorn Oyo has secured the approval of its shareholders to raise Rs 416.85 crore through the issuance of preference shares, according to a report by the Economic Times.
The approval came during an extraordinary general meeting held on June 18, where shareholders voted in favor of the resolution with a 99.99 percent majority. This move will see Oyo’s authorized share capital rise from Rs 901.14 crore to Rs 1,341.14 crore, providing the company with greater flexibility for future share issuances.
In detail, Oyo plans to issue 14.37 crore Series G CCPs (compulsory convertible cumulative preference shares) through a private placement to InCred Wealth. Each preference share is valued at Rs 29, bringing the total raised amount to Rs 416.85 crore.
Preference shares, as defined by Investopedia, are shares of a company’s equity that pay dividends to shareholders ahead of dividends on common stock. This financial strategy underscores Oyo’s ongoing efforts to attract investor confidence and bolster its capital base amidst a challenging market environment.
Speaking to the Economic Times, a source noted, “This EGM marks an important milestone for Oyo as the company’s ability to raise funds and restructure its capital base underscores investor confidence in its long-term vision and prospects.”
The approval comes at a crucial time for Oyo, as the company is reportedly seeking additional funding of Rs 1,000 crore from family offices. Prominent backers for this round include Mankind Pharma promoters Ramesh and Rajeev Juneja, stock market expert Utpal Sheth, and Anand Jain, a senior executive from Reliance Industries.
Furthermore, last month, Oyo withdrew its application for an initial public offering (IPO), reflecting its strategic pivot towards private funding mechanisms in the near term.
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