Company News
Lemon Tree Hotels, which has been in a capital deployment phase to expand operations and create assets, will start scouting for buyers to divest minority stake after fiscal 2021-22, Patanjali Keswani, chairman and managing director, Lemon Tree, has said. The move will be a change in tack for the New Delhi-based company that has been investing in assets.“We have been in a capital deployment cycle. We had to deploy $800 million (Rs 5,524 crore). Most of it is done. After investing the reminder $120 million over the next two years, am going to find partners who can buy 49 per cent, we will have 51 per cent,” said Keswani. The move, he said, will help unlock over a billion dollar of capital for the company over the next two to three years. “Why carry in your balance sheet a high level of risk that is linked to the assets? Just get rid of it,” he said.
To be sure, most of the hotels in India, including the Indian ones that traditionally owned assets, have embarked upon an asset light model for a faster growth and quicker returns. Lemon Tree is likely to announce a deal with Keys Hotels in the next two weeks, he said. The mid-market hospitality chain had signed a non-binding term sheet with the Los Angeles-based Berggruen Holdings, which owns two, three, and four star hotels under Keys Prima, Keys Select, and Keys Select. Keys Hotels owns and manages 21 hotels with 1,911 rooms in 19 cities in India.
If the deal goes through, it will be the first acquisition of a hotel chain by Keswnani-led hospitality firm that currently has a portfolio of 56 hotels (5,525 rooms) with another 31 hotels (3,275 rooms) in the pipeline likely to be added by calendar year 2021.
chart The Warburg Pincus-backed company, which raised Rs 1,038 crore in March 2018, had then said it had plans to add 3,000 hotel rooms over the next three years. The company has been expanding its footprint at a brisk pace over the past 12 months.
