The Delhi High Court has dismissed the appeal of Zostel seeking to allow its claim of 7 per cent stake in OYO before the IPO. This decision of the High Court is being considered as a big relief for OYO, a hospitality firm with investment of Soft Bank. A single judge bench headed by Justice Harishankar of the Delhi High Court gave this decision on February 14.
Let us inform that Zo Rooms, which is engaged in a legal battle with OYO, had filed an appeal in the High Court last year to protect its rights against OYO. Due to this dispute related to shareholding, Zostel was seeking to stop the process of IPO of OYO, but in today’s decision of the High Court Zostel’s effort has got a big setback and the court has rejected its demand.
The root of this dispute between Zostel and OYO goes back to 2015. When budget hotel chain Zo Rooms, owned by Zostel Hospitality, was shut down following the failure of merger talks between the two companies. The two companies had started the process of negotiation for an acquisition agreement on 26 November 2015, which could not be concluded later.
Zo Rooms claims that it has fulfilled its obligation under this agreement and also transferred its business but OYO did not transfer its 7 per cent stake as prescribed under the agreement, after which the matter went to arbitration .
Notably, OYO is awaiting SEBI’s nod for its $1.2 billion IPO. According to media reports, the company may reconsider its valuation in view of the volatile market environment.
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Over the past few months, there has been a huge sell-off in the new generation of Internet-based stocks in Indian and global especially in the US markets and investors are looking very cautious about the stocks of such companies. During the listing last year, there has been a huge sell-off in the shares of Zomato and it is currently looking close to its lowest levels. Similarly, companies like Paytm, Nykaa and PB Fintech are also seen under pressure.
Let us inform that in September last year, OYO had filed an application with SEBI related to its IPO. Presently the company is in the process of giving its clarifications on the queries raised by SEBI.
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