Ultimate magazine theme for WordPress.

India’s Zostel calls on the regulator to reject the IPO application of Oyo, which is supported by SoftBank

The logo of OYO, India’s largest and fastest growing hotel chain, is posted on a hotel building in an alley in New Delhi, India on April 3, 2019. REUTERS / Adnan Abidi / File Photo

MUMBAI, Oct. 12 (Reuters) – Indian hospitality startup Zostel has asked market regulators to reject an IPO application by SoftBank Group-backed (9984.T) rival Oyo Hotels and Rooms due to a legal dispute between the companies over a deal that fell apart six years ago.

Zostel said Oyo’s capital structure is not final and that the draft prospectus filed with the Securities and Exchange Board of India (SEBI) is “with material omissions”.

Oyo said Zostel’s intervention was “unnecessary and repetitive efforts to create false perceptions.”

“This shows a pattern in which Zostel is trying to distract Oyo from pursuing his business goals,” it said in a statement to Reuters.

Oyo filed for an initial public offering (IPO) in late September that will consist of a reissue of shares of up to Rs.70 billion ($ 927.30 million) and an offer to sell existing shares of up to Rs. 14.30 billion will.

It is targeting a valuation of $ 10 billion to $ 12 billion, a source told Reuters this month. Continue reading

Oyo and Zostel are in a lawsuit over a deal in 2015 in which Oyo purchases some of Zostel’s businesses and Zostel receives a 7% stake in Oyo. Although the deal failed, Zostel has stated that it is still entitled to the stake, while Oyo has said otherwise, arguing that they have not reached a final agreement.

Zostel has asked a Delhi court to prevent Oyo from changing its shareholder structure, including through an IPO, according to a petition previously viewed by Reuters. Continue reading

In his letter to SEBI dated October 11, Zostel said that SEBI’s regulations prohibit es Oyo from making a public offer of its shares because it did not issue the shares to Zostel’s shareholders.

Separately, Oyo has challenged an order from a Supreme Court-appointed arbitrator who ruled that the terms of the 2015 deal are binding and that Oyo has violated its obligations by failing to sign a definitive agreement.

An Oyo attorney told Reuters late Monday that nothing in the order prevented Oyo from going public.

Zostel and SEBI did not respond to requests for comments outside of regular business hours.

($ 1 = 75.4880 Indian Rupees)

Reporting by Abhirup Roy; Additional coverage from Chandini Monnappa; Arrangement by Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

Comments are closed.