Zostel has formally requested the Securities and Exchange Board of India (SEBI) to scrutinize the updated draft red herring prospectus (DRHP) filed by Oravel Stays, the parent company of Oyo.
The budget hotel chain alleges that the IPO filing misrepresents an ongoing legal dispute between the two firms, potentially affecting equity claims and investor understanding of the risks involved.
The intervention by Zostel introduces a new layer of regulatory complexity for Oyo’s highly anticipated public listing.
By challenging the adequacy of the litigation disclosures, Zostel is effectively arguing that the current prospectus does not provide a comprehensive view of the legal battles that could impact the company's capital structure or future liabilities.
This move could delay the regulatory approval process or force Oravel Stays to amend its filing with more detailed risk factors.
Oyo, operating under Prism Hotels Limited, has been preparing for an initial public offering valued at approximately ₹6,650 crore.