NEW DELHI: Budget hotel and hostel aggregator Zostel Hospitality Pvt Ltd has filed a complaint with markets regulator the Securities and Exchange Board of India (SEBI) seeking suspension of Oyo’s initial public offering (IPO) proposal.
In the 98-page complaint, it cited “misstatements” and “inadequate disclosures” in the draft red herring prospectus (DRHP) filed by them. The company, which owns Zostel Hostels and ZO Rooms, has said the IPO is non-maintainable as Oyo’s parent firm Oravel’s capital structure is not final. Zostel, in the letter to SEBI, said, “Accordingly, Oravel’s filing of the DRHP in the circumstances, is illegal, in view of the stipulation contained under Regulation 5(2) of the Securities and Exchange Board of India Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018.”
The company said Zostel’s shareholders have a right to get issued in their favour, 7% of the equity securities of Oravel, alleging Oravel has failed to grant the same and hence is prohibited from making any public offer of its shares.
This is the latest episode in the ongoing dispute which dates back to 2015, when Zo Rooms was shut down after the merger talks between the two, which could have resulted in Zo Rooms getting a 7% stake in Oyo, was not implemented after an investor in Oyo objected to the buyout. The two companies have been fighting the case since then.
In March this year, however, a Supreme Court-appointed arbitrator had said that Oyo was in breach of its agreement for the acquisition of Zo Rooms.