As Mukesh Ambani walks into East India Hotels (EIH), promoted by PRS Oberoi, Analjit Singh is set to walk out.
Singh, the chairman of Max India Ltd (MIL), has officially confirmed discussions with Oberoi to sell his current holding in the company. “I have been in the process of exiting the EIH stake through a dialogue with Mr Oberoi,” he told Bloomberg.
Singh presently holds 4% stake in the luxury hotel chain.
In fact, prior to the conclusion of the deal with Ambani-led Reliance Industries, Oberoi had initiated discussions with Singh for partnering as a strategic investor. However, it appears Singh’s investment objectives were not compatible with EIH’s objectives, which led to the deal being called off.
It is not clear if Singh’s decision to exit the EIH investment will also impact the hotel management contract signed between Max India and EIH in August 2009. The arrangement entailed taking over day-to-day operations and management including the branding of the 100-key five-star hotel at Dehradun under the Trident brand. The hotel, targeted at the medical tourists in Dehradun, is being developed by Max India adjacent to the company’s Max hospital.
Oberoi was not available for comment.
Meanwhile, RIL subsidiary Reliance Industries Investment and Holding Pvt Ltd (RIIHPL) has increased its stake in EIH Ltd from the earlier announced 14.12%, bought from the EIH promoters. RIIHPL has bought an additional 0.68% stake in the hotel company through open market trade, taking the overall holding to 14.80%.
There are market rumours as well about Reliance Industries nominating Nita Ambani to the board of EIH. “This is a matter for EIH and its board,” Oberoi had said in an email response to a DNA Money query on the possibility of a board representation.
On the acquisition of stake in EIH by RIL, Oberoi said, though the company had earlier been approached regularly by many people with different interests, the investment objectives of the various parties were not compatible with EIH’s objectives.
“Reliance is a very strong and progressive Indian company with both an Indian and international focus. It has visionary leadership. It is a long-term investor. It does not have any conflict of interest. Reliance believes in EIH, what it has achieved and its future and we think this is a good basis for its investment,” he said.
(With inputs from Hemal Savai, Bloomberg)
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