Lemon Tree Hotels makes decent market debut, stock lists at 10% premium on BSE

 BusinessToday.In        Last Updated: April 9, 2018  | 10:17 IST
Lemon Tree Hotels makes decent market debut, stock lists at 10% premium on BSE

The stock of hospitality chain Lemon Tree Hotels listed at a 10% premium on the BSE.  The stock made its market debut at Rs 61.60 per share, 10% higher than its issue price of Rs 56 per share. The stock hit an intra day high of 65 level on BSE.  The stock listed at the same price on NSE too. Its market capitalisation stood at  Rs 4,765 crore on BSE.

At 10:04 am, the stock was trading 8.84% higher than its issue price at Rs 60.95 on BSE. On NSE, the stock was up 8.39% to Rs 60.70 level.

The IPO was subscribed 1.19 times on the last day of bidding on March 28. The IPO was held from March 26 to March 28 in a price band of Rs 54-56 per share. The shares were available in a lot size of 265 shares.

The Rs 1,038.68-crore Lemon Tree IPO received bids for 15,48,77,925 shares against the total issue size of 12,98,35,580 shares.

The portion meant for qualified institutional buyers (QIBs) was subscribed 3.89 times, non-institutional investors 12 per cent and retail investors 12 per cent.

The company's IPO was of up to 185,479,400 shares (including anchor portion of 55,643,820 shares).

Lemon Tree Hotels raised Rs 311 crore from anchor investors on March 25, 2018.  Kotak Mahindra Capital, CLSA India and JP Morgan India managed the issue. 18 anchor investors invested Rs 311.61 crore at a price of Rs 56 per scrip after allotment of 5,56,43,820 shares, the firm said.

SBI Magnum Balanced Fund, DB International Asia, HDFC Small Cap Fund, Aberdeen Asian Smaller Companies Investment Trust Plc, BNP Paribas Arbitrage and Alpine Global Premier Properties Fund were among the anchor investors.

The hotel chain is backed by buyout firm Warburg Pincus and Dutch pension fund APG. The firm's public offer comprises sale of up to 185,479,400 equity shares by the existing shareholders, including Maplewood, Whispering Resorts, Palms International and RJ Corp.

According to the draft red herring prospectus, promoters hold 31.11 per cent stake and private equity investors and other non-promoter share holders hold 68.89 per cent stake in the firm.

"Our company expects listing of the equity shares will enhance our visibility and brand image and provide liquidity to our shareholders. Listing will also provide a public market for the equity shares in India," the company said in draft red herring prospectus (DRHP).

Lemon Tree, currently the leader in terms of controlling interest in owned and leased rooms has operations spread across the value chain and range from acquiring land to owning, leasing, developing, managing and marketing hotels.

The company has 45 hotels with 4,700 rooms in 28 cities. It has a portfolio of 19 owned-hotels, three owned-hotels are located on leased or licensed land, five leased hotels and 18 managed hotels, a company statement said.

Founded in 2002 by Patu Keswani, the company has hotels under three brands - Lemon Tree Premier, which is an upscale brand; Lemon Tree Resorts, a leisure segment brand; Lemon Tree Hotels, a midscale brand and the economy brand Red Fox Hotels.