OYO Parent PRISM’s IPO Faces Fresh Hurdle as Zostel Seeks SEBI Review Over Litigation Disclosures

New Delhi: Now, when main OYO owner, PRISM, is going to launch its Initial Public Offering (IPO), an earlier legal dispute between Zostel and OYO is back to become relevant. According to the available sources, Zostel has turned to SEBI and requested it to examine the IPO declaration made by PRISM in light of some legal issues related to the litigation.

As reported, this development has brought back the long forgotten dispute into the public attention and generated questions related to the transparency of the IPO declaration at the eve of the IPO.

What is the Dispute About?

The dispute originates from 2015 when OYO and Zostel signed a contract concerning the purchase of Zostel’s business. It should be noted that, as Zostel states, it was supposed to receive almost 7% of equity share from OYO and OYO does not agree with the proposition made by Zostel.

The issue has passed different legal procedures throughout the years without any final solutions, thus, it is considered as one of the most interesting cases in the startup industry of India.

Will this have any relevance to PRISM’s IPO?

At the moment, there is no indication that the IPO would be cancelled or postponed without an end date being given, however SEBI could;

Request other clarifications from PRISM.
Ask about more disclosures regarding litigation matters.
Proceed with the review and come to the conclusion as to whether current disclosures provided are sufficient or not.

When an IPO is made, it is normal for regulatory authorities to check any litigation matters concerning such IPO especially in situations where legal matters are pending.

Reasons why investors need to be careful

Litigation processes do not necessarily make an IPO impractical but they always add uncertainty to the whole process.

Investors wishing to take part in PRISM IPO will have to take a careful look at the prospectus especially the parts dealing on risks involved and active litigation process as well.

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Disclaimer:

This article is intended for informational and news purposes only and should not be considered financial, investment, or business advice. Information is based on publicly available sources at the time of publication. Readers are encouraged to verify details from official announcements before making financial or investment decisions. Company names, trademarks, and logos belong to their respective owners.