Zostel withdrew an urgent application in the Delhi High Court seeking protection for its claimed stake in PRISM, the parent company of OYO [1, 2].
The move comes as PRISM prepares for a public offering, creating a legal tension over ownership rights that could affect the company's valuation and regulatory approvals.
Zostel had approached the court to secure escrow or equivalent security for a seven percent stake [1, 2] it claims to hold in PRISM. The budget hostel chain also requested that the Securities and Exchange Board of India (SEBI) scrutinize the disclosures made in PRISM's IPO filings [3, 4].
PRISM is currently planning an initial public offering valued at ₹6,650 crore [3]. The dispute over equity ownership is not new, as the legal battle dates back to a proposed acquisition in 2015 [3].
The court disposed of the application following the withdrawal. A subsequent hearing is scheduled for Aug. 12, 2024 [1, 2].
While some reports suggested Zostel lost the plea, court records indicate the application was withdrawn by the company [1, 2].
“Zostel withdrew an urgent application in the Delhi High Court seeking protection for its claimed stake in PRISM”
The withdrawal of the urgent plea does not resolve the underlying ownership dispute, but it removes a temporary legal hurdle for PRISM's IPO process. By involving SEBI, Zostel is attempting to use regulatory oversight to validate its 7% stake claim, which could potentially complicate the IPO's pricing or disclosure requirements if the regulator finds merit in the claim.
