Bangalore The Federation of Hotel and Restaurant Associations of India (FHRAI) is the latest entity to write to market watchdog Securities and Exchange Board of India (SEBI), urging it to suspend the upcoming company of hospitality unicorn Orawell Stages Pvt Ltd (OYO) Is. Initial Public Offering (IPO) for not making sufficient disclosures in its draft prospectus.
The hospitality body, which counts over 50,000 hotels as members, alleged that Oyo has failed to make relevant disclosures around its ongoing investigation by the Competition Commission of India (CCI), as well as pending lawsuits against its subsidiaries. also failed to disclose the results of
“The DRHP filed by Orawell fails to disclose that there is no bar to the prima facie findings of the CCI that Orawell has violated the provisions of the Competition Act nor any stay on the investigation initiated by the Director General in respect of the same. FHRAI said in a letter to SEBI on October 22.
FHRAI claimed that the investigation by the Director General is pending and it is known to be at an advanced stage.
“Instead, instead of making a fair disclosure on the nature and outcome of the investigation as directed by the CCI, Orawell, in its DRHP, tried to mislead investors by engaging in irrelevant issues relating to the interim relief sought by Rubtub Solutions Pvt Ltd (“Treebo”). and Casa2Stays Private Limited (“FabHotels”),” added FHRAI in its request to SEBI.
Mint has reviewed a copy of the letter sent by FHRAI to SEBI.
Earlier in October 2019 and February 2020, the CCI acted on the FHRAI and Treebo complaint to determine anti-competitive practices by travel portals MakeMyTrip and Oyo and added the matter.
“To our knowledge there is not a single case where a company being probed by the Director General of CCI for anti-competitive practices has been permitted by SEBI to initiate an IPO. In view of the same, the proposed IPO of Orawell is premature and should be rejected/postponed at this stage, while a major investigation by the CCI is pending,” FHRAI said in a letter to SEBI.
FHRAI further alleged that Oyo has failed to disclose the full results of the CCI investigation into its DRHP, which may have led to ‘behavioral changes’ in the business practices undertaken by the company and its subsidiaries.
Earlier this month, Zostel Hospitality Pvt. Ltd., which owns Zostel Hostel and ZO Rooms, also wrote to SEBI urging it to reject the draft prospectus filed by OYO and suspend the proposed initial public offering of the latter.
Explaining the reason for its request, Zostel said that OYO’s “IPO is non-maintainable as the capital structure of Orawell is not final”.
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