Published on : Friday, December 28, 2018
An affiliate of Warburg Pincus and Lemon Tree Hotels Limited will hold 68% and 30% stake, respectively in the JV, with the balance 2% to be held by Mr. Patanjali Keswani. Warburg Pincus, leading global private equity firm, has successful experience in helping create market leading platforms in the shared accommodation space in other parts of Asia.
The platform would provide co-living solutions for students and young professionals. These shared spaces will include living room, gym and well-equipped cafeterias in order to provide its residents with a high-quality and full-service co-living accommodation. Millennial population desires modern housing facilities with a sense of community living, which is not provided in the existing accommodation offerings.
Patanjali (Patu) Keswani, Founder, Chairman and Managing Director, Lemon Tree Hotels Limited, said: “We are delighted to once again partner with Warburg Pincus at an early stage of this exciting new business opportunity, which will allow Lemon Tree Hotels to move into a segment which is nascent but closely aligned to our existing target customers and which is expected to see tremendous growth, going forward.”
Rental housing projects will be developed through a combination of strategies – greenfield purpose-built properties; refurbishment of existing under-managed/stressed commercial and residential assets taken on lease/acquisition basis; and management of existing for-rent accommodation projects. There will be an initial investment of Rs. 1,500 Crore. Over a period of time, an additional infusion of Rs. 1,500 Crore in equity is expected.
Mr. Keswani believes that co-living spaces will gain traction given the lack of quality accommodation and high rental/capital costs across key Indian cities relative to salary levels. The purpose-built developments will provide a combination of unique product design and diversified service offerings.
Anish Saraf, Managing Director, Warburg Pincus said: “India has a large addressable rental population across students and young professionals which is expected to grow significantly as a result of rapid urbanization, increasingly unaffordable housing prices/rentals and shortage of on-campus housing infrastructure.”
He believes that this JV is well-positioned to become a leading for-rent accommodation provider in India, as Warburg Pincus gives access to capital and Lemon Tree Hotel brings design/development capability on board along with the existing on-ground infrastructure across the country.