According to Patanjali G Keswani, chairman and managing director, Lemon Tree Hotels, the promoters are not selling any of stake in the company
Global private equity major Warburg Pincus will be divesting its 50% shareholding or 94,500,053 shares in Lemon Tree Hotels that is launching an initial public offering (IPO) of over Rs 1,000 crore next week.
The PE firm, via its arm Maplewood Investment, had bought a little over 24% stake in the homegrown mid-market hospitality chain in 2006 for Rs 210 crore.
According to Patanjali G Keswani, chairman and managing director, Lemon Tree Hotels, the promoters are not selling any of stake in the company. "There is no primary component in this public offer," he said.
The promoter entities hold a little over 31% stake in the hotel company and the balance is held by PE and non-promoter shareholders.
Another PE investor, APG, with 15.10% stake will also continue to stay invested in the hospitality company.
Among non-promoter shareholders making partial exits through this IPO are RJ Corp which has 25,320,584 shares, Ravi Kant Jaiuria & Sons (Hindu Undivided Family) – 13,999,416 shares, Whispering resorts – 6,986,180 shares, Swift Builders Ltd – 883,440 shares, Five Star Hospitality Investments Ltd – 23,649,816 shares, Palms International Investments Ltd – 19,159,911 shares, Satish Chander Kohli – 480,000 shares and Raj Pal Ganshi – 500,000 shares.
The public offer of 18.5 crore (185,479,400) equity shares will constitute up to 23.59% of the company's post-offer paid-up equity share capital. The issue will open for subscription on March 26 and close on March 28.
The price band for this IPO is between Rs 54 to 56 per share. Lemon Tree will raise a little over Rs 1,038 crore at the higher end of the price band.
The largest branded player in the Indian mid-market hotel segment, Lemon Tree Hotels currently operates 45 hotels with 4,697 guestrooms across 28 cities. Another 28 hotels comprising 3,038 rooms are currently under various stages of development. Approximately 1,000 rooms will be launched over the next 12 to 14 months.
The company plans to have over 70 hotels with about 8,000 guest rooms in over 50 cities by 2021. While Lemon Tree owns and operates close to 70% of its hotels (under Lemon Tree Premier, Lemon Tree and Red Fox brands), balance 30% is through management contracts. The company will eventually pursue the management contracts as its key approach for expansion with hotels in the neighbouring countries like Nepal and Bhutan in the coming years.
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