In a first of its kind deal framework in Indian hospitality,
Indian Hotels Company (IHCL) will launch about a dozen hotels in the next three years through its partnership with Singapore’s
sovereign wealth fund GIC, managing director
Puneet Chhatwal told ET.
IHCL had announced last month that it was setting up a three-year, Rs 4,000-crore investment platform with GIC to acquire hotels in the luxury, upper upscale and upscale segments in
India. These hotels would be owned by special purpose vehicles, to be funded equally with debt and equity. The local company would put in 30% equity with 70% to be brought in by GIC.
Chhatwal said the hotel mix held under the platform would include new and some existing IHCL-owned properties with a total of 2,000-2,500 rooms, including 1,500-1,700 which would be newly added. Most hotels would be under the Taj brand, but some might carry the Vivanta tag.
“For example, an IHCL-owned hotel will be moved to the platform to bring down its shareholding to 30% and 70% will then be monetised. So, IHCL’s equity is being funded through its own assets while the company will use that money to reduce debt,” he said. “Already the debt is down to Rs 1,900 crore and the net-debt-to-Ebitda ratio is down to 2.11 from 6.5 earlier. The idea is to bring debt to less than Rs 1,000 crore.”
Chhatwal, who is also the company’s chief executive, had previously told ET that the company was looking at assets that were distressed, including those undergoing the bankruptcy and insolvency process, and being sold at a compelling value.
IHCL and GIC plan to look for acquisitions in India’s top 10 cities besides state capitals.