FHRAI With 2600 Hotels Want Oyo’s Rs 8000 Cr IPO To Be Dismissed: Find Out Why?
OYO’s IPO of rs. 8340 has been halted by the Federation of Hotel & Restaurant Associations of India. The reason behind this has been cited to be misrepresentation in the draft documents.
FHRAI has specifically asked the SEBI for the IPO to be suspended.
Read on to find out all the details!
FHRAI Asks SEBI To Suspend OYO’s IPO
As per reports, the FHRAI has asked the Securities and Exchange Board of India to halt the proposed Rs 8,430 crore initial public offering of OYO. The FHRAI claims that Oravel Stays is engaging in anti-competitive business practices.
FHRAI, in a letter, has stated, “We request that your office ought to reject the DRHP (draft red herring prospectus) and suspend the proposed initial public offering of Oravel Stays in the interests of investor protection.”
OYO has specifically disclosed in its draft IPO documents filed earlier this month that it is involved in a matter before the statutory regulator and “could be subject to penalties.”
The complaint by FHRAI is being investigated by the Competition Commission of India.
OYO IPO And Its Never-ending Troubles
OYO plans to raise around 84.3 billion rupees ($1.16 billion) in an IPO. OYO intends to issue up to 70 billion rupees worth of new shares, while existing shareholders may sell up to 14.3 billion rupees worth of shares.
Previously, Zostel Hospitality Pvt Ltd has asked SEBI (Securities Exchange Board of India) to suspend the $1.2 billion IPO of OYO. It has accused OYO of misrepresenting the facts in its DRHP and that its upcoming IPO omits disclosure of a 7% stake of Zostel’s shareholders in OYO’s parent entity.
Zostel and its shareholders “have the right to get issued in their favour 7% of the equity securities of Oravel”. Since it has failed to grant these, it should be barred from making any public offer of its shares.
It is concerned that OYO’s listing could mislead the public with regard to the risk involved.
The issue raised by FHRAI is regarding the abrupt termination of hotels, including those operated by Treebo and FabHotels, listed on MakeMyTrip, an online travel platform, following a commercial arrangement between MMT-Ibibo and OYO.