FHRAI urges Sebi to suspend Oyo IPO

• Follow

The Federation of Hotel and Restaurant Association of India (FHRAI), has asked markets regulator Sebi (Securities and Exchange Board of India) to suspend Oyo’s proposed IPO (Initial Public Offering) for making misstatements and inadequate disclosures in its draft prospectus, Times of India, reported on Tuesday. FHRAI in an eight page submission to the markets regulator accused Oravel Stays, the parent of the hotel chain for anti-competitive business practices, inadequate disclosures of critical court cases and valuations that do not corroborate well with other numbers disclosed in the draft prospectus.

Through the IPO, the hospitality firm is looking to raise $1.2 billion. The hospitality industry’s apex body’s statement comes on the back of Zostel Hospitality (operator of Zo Rooms) asked Sebi to suspend the proposed IPO as the draft prospectus was filled with material omissions and blatant misstatements.

Oravel’s revenue may have a serious impact

It also stated that Oravel has failed to adequately disclose the consequences of an unfavourable verdict by India’s Competition Commission of India (CCI). Also, the industry body has moved the CCI against Oyo for engaging in anti-competitive practices. The investigation is presently in advanced stages.

According to the publication, Oravel have disclosed the possible penalty imposed by the CCI, but has not disclosed the CCI’s power to direct behavioural changes to be undertaken by Oravel which would completely disrupt the anti-competitive business practices engaged by them. Without this, their revenues would be seriously impacted.