Zostel moves SEBI; OYO calls it 'unnecessary and repetitive' efforts

Zostel Hospitality Pvt Ltd has written to the market regulator SEBI (Securities Exchange Board of India), seeking the suspension of $1.2 billion IPO (initial public offering) of OYO. This comes at a time when SEBI has issued its observations in response to OYO's Draft red Herring Prospectus (DRHP) on October 1.

Top company sources confirmed to reporters that Zostel has expressed its concerns on the violations of SEBI's ICDMR (Issue of Capital and Disclosure Requirements) regulations by OYO, especially "inadequate disclosures", in its filings with the market regulator.

Zostel alleged that OYO has misrepresented the facts in its DRHP and that its upcoming IPO doesn't include the disclosure of a 7 per cent stake of Zostel's shareholders in OYO's parent entity.

Zostel, which is a budget hotel and hostel aggregator, said OYO's listing on the stock exchanges could mislead the public with regard to the risk involved.

Oyo, while maintaining that award does not direct the company to issue any shares to Zostel or its shareholders, said it condemns Zostel's self-serving misrepresentation of the case facts, and that it is an attempt to overreach Delhi HC proceedings.

"Zostel's communication shows unnecessary and repetitive efforts to create a wrong perception. This shows a pattern of Zostel trying to distract OYO from pursuing its business goals. The repeated reliefs being sought are not consistent with an award by the Arbitration Tribunal from March 2021, which has not granted an award for the issue of any shareholding in OYO to Zostel.

It had merely given them the direction for seeking specific performance of the non-binding term sheet. The Tribunal had ruled and categorically acknowledged that the definitive agreements were neither finalized nor agreed upon. OYO reiterates that the entire process was merely at the stage of exploratory discussions, and no definitive agreements were finalised or executed between the parties," Oyo said in a statement.