Mumbai: Buyout firm Warburg Pincus is set to make a partial exit from its almost 12-year-old investment in Lemon Tree Hotels Ltd, as the company prepares to launch its initial public offering (IPO) at the end of this month.
On Monday, Lemon Tree Hotels said that it will launch its Rs1,039 crore IPO on 26 March. The hotel operator has set a price band of Rs54-56 per share for the IPO. At the upper end of the price band, the share sale values the company at Rs4,403 crore. The offer will close on 28 March. The public offering is a pure offer for sale.
Warburg Pincus, which had invested approximately Rs300 crore in 2006 for a 24% stake in the company, is selling a 12% stake in the company through the IPO. At the upper end of the price band, Warburg will garner Rs529 crore (approx $81.2 million) from the share sale.
Warburg recently sold its investment in logistics company Continental Warehousing Corp. (Nhava Seva) Ltd. On Monday, Hindustan Infralog, a joint venture between Dubai-based port operator DP World and the National Investment and Infrastructure Fund, announced that it is acquiring 90% stake in Continental Warehousing. Warburg Pincus held a 40% stake in the company. Warburg had invested in the logistics operator in 2011.
The American private equity firm is also looking to make a part exit from its investment in jewellery retail chain Kalyan Jewellers India Ltd. In February, Mint reported that Kalyan Jewellers is planning to file the draft papers for its proposed Rs2,500 crore IPO in March.
Last year, Warburg sold shares worth Rs530 crore in a part exit from AU Small Finance Bank Ltd, through the bank’s IPO.
Other investors that are selling shares in the Lemon Tree IPO include Delhi-based billionaire Ravi Jaipuria and his firm RJ Corp. Jaipuria and his company are selling shares worth Rs220 crore.
Founded by Patanjali Govind Keswani in 2002, Lemon Tree operates under three brands that cater to the needs of different hotel segments—Lemon Tree Premier is targeted primarily at the upper-midscale hotel segment; Lemon Tree Hotels is targeted at the midscale hotel segment; and Red Fox by Lemon Tree Hotels is targeted at the economy hotel segment.
As of 31 January, Lemon Tree operated 4,697 rooms in 45 hotels (including managed hotels) across 28 cities in India.
“Out of the total rooms, 3,200 rooms are owned, while around 1,500 rooms are managed,” said Keswani, chairman and managing director of Lemon Tree.
For nine months ended 31 December 2017, Lemon Tree reported a net profit of Rs12.59 crore on a total revenue of Rs174.31 crore.
In fiscal 2017, the company reported revenue of Rs223.77 crore, up 15% from the previous year. The company reported a profit of Rs5.35 crore from a loss of Rs16.34 crore in the previous year.livemint