OYO offers to buy Rs. 50cr shares from current, ex-employees
What's the story
OYO Rooms, India's second-most valuable startup, has offered to buy back shares from current and former employees to the tune of Rs. 40-50cr.
The share buyback will commence in January, and is the first in a series of programs that is expected to reward former and current employees holding OYO stock with a total of $150mn-$200mn.
Here are the details.
Details
Details about OYO's share buyback program
Around 250 ESOP (employee stock ownership plan) holders will be able to participate in the share buyback in January and can offer their shares for re-purchase.
However, the hospitality startup declined to name the investors who will purchase the shares.
Notably, OYO's move to allow liquidation options to ESOP holders come at a time when many other startups have started doing the same.
Quote
OYO Rooms' statement on the buyback program
"This [buyback program] is part of our continuing efforts to express our gratitude and reward our employees for their hard work, perseverance, and commitment to the company and its mission," said OYO Hotels & Homes CHRO Dinesh Ramamurthi.
Year
OYO Rooms has had a magnificent year
The move by OYO also comes after what has been its best-ever year yet.
Earlier in the year, OYO signed a strategic agreement with MakeMyTrip, which resulted in hotels by OYO rivals Treebo and Fab Hotels being de-listed from MakeMyTrip's platform.
Further OYO also expanded to several international markets, including China and Japan, and raised $1bn from SoftBank and other investors to become India's second-most valuable startup after Paytm.
Buyback
Other notable startups that have offered ESOP buyback programs
Meanwhile, following in the footsteps of Flipkart, which has had many ESOP re-purchase programs over the years, many startups offered their first-ever buyback programs this year.
Swiggy spent $4mn in ESOP buyback this year, while Urban Clap spent $2mn-$2.5mn on a similar program.
Other startups that offered ESOP buybacks include fintech startup RazordPay, and logistics startup Rivigo.
Boost
Why ESOP buybacks are a boost to the startup ecosystem
The fact that increasing numbers of startups are offering ESOP buyback programs comes as a boost to the startup ecosystem in India.
While many startups offer ESOPs to employees for their contributions, the ecosystem, previously, did not have a good track record of proving that ESOPs mattered as a form of compensation.
With liquidation of shares becoming an option, employees can have more faith.