FHRAI Asks SEBI To Halt OYO IPO Post CCI Penalty

SUMMARY

CCI imposed a fine of INR 392 Cr on MakeMyTrip, Goibibo and OYO on the ground of unfair business practices

FHRAI alleged that OYO is responsible for the “systemic depredation of the budget segment hotel business”

OYO has however claimed that FHRAI is resorting to incorrect sensational statements

The Federation of Hotel & Restaurant Associations of India (FHRAI) has written to the market regulator SEBI to stop OYO from taking the company to public bourses following CCI’s penalty on the ground of unfair business practices.

The move comes shortly after the competition watchdog CCI imposed a cumulative fine of INR 392 Cr on online travel firms MakeMyTrip, Goibibo and hospitality services provider OYO.

“Now that OYO has been found guilty of indulging in anti-competitive and unfair business practices…it is imperative that its IPO should not be allowed in the interest of the hospitality sector, consumers and potential investors,” the industry body said in a statement.

FHRAI alleged that OYO is responsible for the “systemic depredation of the budget segment hotel business” and that its “notional billion dollar valuation is a cause of concern”.

According to an ET report, OYO has, however, claimed that FHRAI is resorting to incorrect sensational statements and misrepresenting CCI’s order.

It also alleged that FHRAI’s notice to SEBI is the former’s way of distracting attention from an internal rift and NCLT’s dissolution of the executive committee.

The IPO-bound hospitality major reported an EBITDA-positive quarter (Q1 FY23) and filed an addendum to its DRHP.

While its Q1 FY23 is not out yet, it reported INR 1,939.8 Cr in losses in FY22 – a 51% YoY decline. In the first half of 2022, the company reported 1.68 Lakh+ storefronts, including 12.5K+ hotels, 77.9K homes and 77.5K+ listings.

The startup had been under investors’ radar over profitability issues and SoftBank’s markdown of its shares had reduced the company’s valuation by nearly 30%.

SEBI had granted an in-principle nod to OYO for its INR 8,430 Cr IPO but it repeatedly delayed listing on bourses amid adverse market conditions.

But OYO is not the only one blighted by the market volatility and investors’ dissent as several startups – MobiKwik, boAt, Snapdeal, Droom, Pine Labs, PharmEasy and more – have deferred their IPO plans.