Berggruen to invest Rs345 crore

With equity and debt resources opening up for the hospitality sector, Berggruen Hotels is beefing up its ‘Keys’ hotels, resorts and serviced apartment portfolio in the country.

The venture, which is backed by New York-based private equity firm Berggruen Holdings Inc, has outlined investments of around $72 million (Rs 345 crore).

Sanjay Sethi, managing director of the Mumbai-headquartered hospitality firm, told DNA Money, “The investments will be made through a mix of debt and equity in the 60:40 ratio. The funds will be deployed in the next 18-24 months.”

Keys, a budget and mid-market hotel brand, is currently operational in Thiruvananthapuram, Lonavala and Hyderabad. Sethi said the hospitality company has an association with IDFC (which financed it for earlier projects) in addition to a consortium of banks that has made funding commitments for future plans. “The required funds have already been tied up and will be drawn as and when required,” Sethi said.

On market rumours about the business being under pressure and the possibility of a stake dilution, Sethi said that the company was earlier looking to raise fresh equity as there was some pressure on the business due to the global meltdown.

“However, valuations appeared suppressed and we were not comfortable diluting stake at such lower multiples. With a quick turnaround in the business environment, fundraising plan has been stalled and investment will continue to happen from the parent company besides through debt,” Sethi said. He also denied rumours about Berggruen Holdings founder and president Nicholas Berggruen diluting any equity stake in the India business.