IL&FS Investment Managers Ltd-backed IntelliStay Hotels Pvt Ltd has drawn interest from four global hospitality players including Wyndham Hotels & Resorts and Japan's Seibu Holdings-owned StayWell Hospitality Group for sale of its stake.

Industry sources said New York Stock Exchange-listed Wyndham Hotels and StayWell are in various stages of discussions with the owners/management of IntelliStay for a possible strategic investment.

"High-level talks are already on with the two global firms for a majority stake sale," a source told DNA Money, adding that negotiations with Wyndham Hotels are at a fairly advanced stage.

An email to Ignace Bauwens, regional vice president for the Middle East, Eurasia and Africa (MEA), Wyndham Hotel Group, remained unanswered.

Rohit Vig, managing director, StayWell Hospitality Group India, did not comment on the said development. Staywell is owned by Prince Hotel, a subsidiary of Tokyo Stock Exchange-listed conglomerate Seibu.

In an earlier interaction, Prashanth Rao Aroor, chief executive officer, IntelliStay Hotels, had said that the company was in discussions with global hospitality chains for a strategic investment/partnership.

"I cannot disclose any names as the conversations are all protected by strict non-disclosures," he had said, adding that the strategic investor will also have the option of buying out IL&FS Investment Managers Ltd's (IIML) stake in the company.

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.

IntelliStay has been looking to onboard a strategic investor for some time now. The stake divestment plans had to be fast-tracked as IIML's parent Infrastructure Leasing and Financial Services (IL&FS) is embroiled in a major financial crisis. Accordingly, talks with potential suitors have been initiated with the hope of closing the transaction soon.

DNA Money had first reported this development in its November 28, 2018 edition.

According to industry sources, StayWell is planning to aggressively grow its portfolio and is looking at acquisitions across key gateway cities globally.

"StayWell is looking at a wide variety of acquisitions across the board including individual hotels, brands, groups and so on. The top management is reviewing hotel portfolios as well as individual hotels in Mumbai and Delhi for possible acquisitions. In fact, just last month, it acquired Arch Hotel London for $100 million and deal sizes for future acquisitions are expected to be around the same figure," said one of the sources.

While StayWell could be a late entrant into the IntelliStay deal, it is understood that Wyndham may have taken the discussions to an advanced level.

Wyndham has been looking at inorganic growth opportunities in the Indian hospitality market for some time now. In 2016, it tried to acquire Sarovar Hotels & Resorts but lost out to France's Louvre Hotel Group, which is owned by Chinese conglomerate Jin Jian Hotels. Having lost out once already, the Wyndham management may not want to repeat the mistake.

"Wyndham has largely used the franchise route to establish a presence in the Indian hospitality market. However, the company is keen to quickly expand India business and have a hotel management team/vertical as well to boost the hotels' portfolio. IntelliStay definitely has a good pipeline and makes for a good strategic fit for Wyndham's plans in India," said an industry expert on condition of anonymity.

IntelliStay operates hotels across four brands – i-Stay, Mango.Hotels, Mango.Suites and Apodis Collection. It currently has 19 operational hotels, 13 are in projects stage and 24 at a letter of intent (LoI) stage. While the business is yet to become profitable, the IntelliStay 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.

LINING UP

• While StayWell is planning to aggressively grow its global portfolio, Wyndham, which lost the race to buy Sarovar Hotels to France’s Louvre, may have taken the discussions to an advanced level

4 - Brands IntelliStay has – i-Stay, Mango.Hotels, Mango.Suites and Apodis Collection

19 - Operational hotels

13 - In projects stage

24 - At a letter of intent (LoI) stage

Rs 44 crore - Net revenue to books IntelliStay management is expecting this fiscal