Hotel Leelaventure Expects Private Equity Infusion Soon
Hotel Leelaventure Ltd expects to conclude a deal within the next six to eight weeks with at least one private equity firm to raise 6 billion rupees by selling five percentage points of its founders’ stake. “All the fund-raising plans will immediately be used for debt reduction,” Vice Chairman and Managing Director Vivek Nair told reporters. The founders currently hold about a 55% stake in Hotel Leelaventure, he said. Mr. Nair said Hotel Leelaventure currently has debt of about 38 billion rupees, which it plans to halve to 19 billion rupees after the stake sale to the private equity firms and other measures. “The remaining loan is long-term and can be repaid over 10 to 15 years,” Mr. Nair said.
Hotel Leelaventure, which operates seven luxury hotels under the Leela Palace and Leela Kempinski brands, also plans to raise 2.5 billion rupees in the next three months by selling land in the southern city of Chennai and another 9.5 billion rupees by developing high-end apartments in the western city of Pune and Bangalore and Hyderabad in southern India.
“We have a Leela business park in Chennai with 250,000 square feet developed area. In the next three months we’ll be disposing that off. Likewise, we have three landmass in Pune, Hyderabad and Bangalore. We’ll be building upmarket residential apartments. The proceeds of the sales of these apartments will be included in that [reducing debt],” Mr Nair said. Indian and global hotel chain operators are rushing to expand their presence in the country, where sharp economic growth, surging businesses and a steady rise in tourist arrivals has led to a shortage of hotel rooms. A total of 5.58 million foreign tourists visited India in 2010, a growth of 9.3%, according to the tourism ministry.
Hotel Leela sees 85-90% occupancy in Mumbai, Gurgaon ahead (Last Year)
Hotel Leela expects 40% growth in revenues this fiscal (This Year)