Working with - not against - Ola, OYO founders to make cos profitable: SoftBank

Fearing loss of control over the companies they founded, both Ritesh and Bhavish have made moves to claw back control. Especially, since the losses continue to mount and observers believe SoftBank is getting restless

Amidst fear that the largest investor SoftBank plans to oust founders Bhavish Aggarwal and Ritesh Agarwal from ride hailing firm Ola and hotels aggregator OYO Rooms, the $100 billion SoftBank Vision Fund CEO Rajeev Misra says the fund is working with - not against - them to ensure profitability.

"The amount of time Munish and I spend on Ola and OYO is disproportionate," says Misra. "You should call the founders Ritesh and Bhavish. See how much time we are spending with them. Every 2 weeks, we have a one hour call. We look at updates, what's happening."

Fearing loss of control over the companies they founded, both Ritesh and Bhavish have made moves to claw back control. Especially, since the losses continue to mount in the companies. And observers believe SoftBank is getting restless.

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In July 2019, OYO's Agarwal borrowed $2 billion from financial institutions to raise his holding in the hotels company from around 10 per cent to nearly 30 per cent. SoftBank owns nearly 50 per cent of OYO. Agarwal's firm RA Hospitality Holdings entered into a $2 billion deal for primary and secondary management investment rounds. A part of the transaction valued the company at $10 billion, substantially higher than the previous funding round of sub-$1 billion.

Earlier, Ola founder Bhavish had structured a similar deal after rejecting SoftBank's proposal to invest an additional $1.1 billion in Ola and raise SoftBank stake to over 40 per cent. Aggarwal sought a clause in the agreement that called for veto powers to founders on appointment of a new CEO in the firm. Bhavish eventually turned down the offer. Even though SoftBank was one of Ola's earliest backer since 2014, Bhavish has been concerned since SoftBank bought a substantial stake in its rival, Uber Technologies, and brought on the table a proposal to merge the two - a proposal that could not be followed through because of monopoly restrictions in various parts of the world. SoftBank also owns China's largest ride hailing firm Didi Chuxing.

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"We are the biggest shareholder in Ola and Paytm and all these. We own 50 per cent of OYO. We are spending so much time with OYO bringing their costs down, making them successful, we're fully married. OYO's success is our success. Why are we hiring more people and spending so much time in the background. We have a big team in London and Mumbai focussed on India. We have a lot of brain power focussed on India," says Misra.

Meanwhile, Ola has continued to raise funds going as far as an unusual K series funding round. In the last round Ola raised $300 million from Hyundai Motor and another $90 million from Sachin Bansal.

Before exiting the firm, even Flipkart founder Sachin Bansal tried a similar route to increase control over the company. The then Flipkart chairman and co-founder had planned to borrow up to $1 billion to raise his stake in the company. However, well before the plan could fructify, Bansal was forced out of Flipkart in mid-2018.

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