Negotiations are on with four major global firms and some of them already have some presence in the Indian hospitality market
IL&FS Investment Managers Ltd (IIML) and PRAMA Hotels-backed homegrown hospitality firm IntelliStay is intensifying its efforts to bring in a strategic investor. Negotiations are on with four major global firms and some of them already have some presence in the Indian hospitality market, industry sources told DNA Money.
While IntelliStay has been on a lookout for a strategic investor for over a year, the stake divestment talks have been put in the fast lane as IIML is owned by Infrastructure Leasing and Financial Services (IL&FS), which is embroiled in a major financial crisis.
When contacted, Prashanth Rao Aroor, chief executive officer, IntelliStay Hotels Pvt Ltd (IHPL), said the company is in discussions with global hospitality chains for a strategic investment/partnership. "Currently, the discussions revolve around how integration adds value to both partners, potential deal structures and grounds for valuing the businesses, our brands etc. We have received interest from some of the listed entities as well. I cannot disclose any names as the conversations are all protected by strict non-disclosures," said Aroor.
IIML holds a majority stake in Apodis Hotels & Resorts Ltd (AH&R), which owns 90% stake in IntelliStay. PRAMA, promoted by Pravin Rathore and Mahesh Gandhi, is the other major shareholder in AH&R.
According to industry sources, IntelliStay would be looking to divest a significant minority or a majority stake in the hotel management company. Additionally, the strategic investor/partner will have the option of buying out IIML's stake in the company, thereby increasing its overall shareholding in the hospitality firm.
The IntelliStay management had last raised capital in 2012 and has used the funds to achieve a business breakeven. "The company is accruing profits and I can confirm that we will be profitable in this fiscal. We are of a firm belief that we will need a partner to take the company to its next level of growth. To that extent, we have an opportunity to offer a strategic stake. It's quite possible that there could be a secondary as well as primary stake sale in the company," said Aroor.
IntelliStay operates hotels across four brands – i-Stay, Mango.Hotels, Mango.Suites and Apodis Collection. It has 19 operational hotels, 13 are in projects stage and 24 at a letter of intent (LoI) stage. The company management is expecting to close the year with Rs 44 crore in net revenue to books and Rs 7 crore in earnings before interest, tax, depreciation and amortisation.
Pursuing an asset-light strategy, IntelliStay competes with the likes of Louvre-owned Sarovar Hotels & Resorts that has a portfolio of 76 hotels and Nepal's Chaudhary Group-owned CG Hospitality, which has 57 hotels in its network. As part of its expansion strategy, the company has recently entered into multi-hotel deals with three asset owning companies for another 15-odd hotels.
"Multi-hotel deals are a good way to grow the business. We look for good partners who understand the business and have the financial appetite. We will be doing more such deals going forward to speed up growth over the next couple of years," said Aroor, adding that multi-hotel deals are back in vogue with a more realistic approach.
DISCUSSIONS ON
- Negotiations are on with four major global firms and some of them already have some presence in the Indian hospitality market
- IntelliStay has been on a lookout for a strategic investor for over a year. The stake divestment talks have been put in the fast lane as IIML's parent IL&FS is in the middle of a crisis
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