Lemon Tree Hotels Ltd, which operates an eponymous mid-variety motel chain, is acquiring Keys Hotels for Rs 471 crore ($68.2 million at the modern-day alternate fee) to enlarge its portfolio. In an inventory-trade filing, Lemon Tree Hotels said that it would buy out Berggruen Hotels Pvt. Ltd, the parent of Keys Hotels, at a company valuation of Rs 605 crore ($87.6 million). New Delhi-based Lemon Tree counts private fairness large Warburg Pincus among its investors. Lemon Tree is purchasing Fleur Hotels Pvt. Ltd, that’s a completely owned subsidiary. Berggruen Hotels Pvt. Ltd becomes an indirect subsidiary of Lemon Tree, it brought. The enterprise expects to finish the transaction within two months.
Separately, Fleur Hotels Pvt. Ltd will increase capital from Dutch pension fund APG Asset Management NV, a present investor, and discern Lemon Tree Hotels Ltd by issuing compulsorily convertible preference shares worth Rs 421 crore ($61 million). APG’s strategic actual property pool will contribute Rs 360 crore, closing Rs 61 crore from Lemon Tree. The developments come after Lemon Tree announced in March that it had signed a percent to collect Keys Hotels. At the time, Lemon Tree had stated it’d amplify its operating portfolio to seventy-five inns with 7,322 rooms in 44 towns in India after the purchase. It had a pipeline of 33 motels with 3,389 rooms in 26 cities to open through 2020-21.
Lemon Tree Hotels are located in metro regions, including Delhi-NCR, Bengaluru, Hyderabad, Chennai, and Tier I and Tier II towns. Lemon Tree immediately owns some resorts and operates some others thru lengthy-time period rentals for hotels owned by 0.33 parties. The chain operates below three classes in the mid-priced phase—the upper-midscale class referred to as ‘Lemon Tree Premier,’ the midscale segment ‘Lemon Tree Hotels’, and financial system inns below. ‘Red Fox’. Founded in 2006, Keys Hotels operates 21 inns throughout 19 locations in India, with 1,911 rooms. It runs hotels below the Keys Prima, Keys Select, and Keys Lite brands.
Warburg Pincus had stated ultimate December that it became putting in place a joint challenge with Lemon Tree Hotels that deliberate in investing as tons as Rs 4,000 crore for developing full-service lodging for college students and young operating professionals. Shares of Lemon Tree were trading at Rs 69.25 apiece at the BSE, up to three.82% from the previous close at the time of publishing this document. The hotel chain had made a wonderful buying and selling debut remaining April, with its stocks leaping 28% on the primary day of trading.
According to its internet site, APG offers offerings together with govt consultancy, asset control, pension management, and pension conversation. It manages pension funds and employers in sectors and education, authorities, housing institutions, energy and application corporations, and production. The organization controlled €505 billion (around $571.72 billion, or Rs 39. Forty-seven lakh crore) in the property as of April 2019.
In 2014, APG invested Rs three hundred crores (around $50 million) in Lemon Tree, upping its stake inside the agency to thirteen% from five. To 6%. Before that, in 2012, it invested Rs 650 crore within the mid-variety motel operator. In 2017, the pension fund asset manager invested $one hundred seventy-five million (around Rs 1, a hundred and fifty crores) in Virtuous Retail South Asia Pte. Ltd, a joint venture with Virtuous Retail, the retail improvement arm of The Xander Group.