Chalet Hotels to raise Rs. 2,000 crore from IPO

Chalet Hotels to raise Rs. 2,000 crore from IPO

Mumbai: Chalet Hotels – hospitality arm of K Raheja Corp’s is likely to enter the primary market to raise about Rs. 2,000 crore. Chalet Hotels own several hotel properties including Marriott and Renaissance.

The sources informed that the offer document of Chalet Hotels is expected to be filed this month and the company is proposing to open the public issue in October.

As per the available information, the company intends to invest Rs 3,000 crore over the next 4-5 years to expand rooms in existing hotels and spread to new geographies. The IPO is one of the ways to finance the expansion plans and reduce debt which was Rs 2,500 crore as on March 31, 2017.

Shoppers Stop, a listed retail chain, is also owned by Chandru Raheja, promoter of K. Raheja Corp.

In April, Lemon Tree Hotels, which operates in the mid-priced hotel segment, made a strong debut on the exchanges with a premium of 10 per cent over the offer price after raising about Rs 1,040 crore. The issue was subscribed 1.19 times.

Chalet Hotels has a different business model in terms of owning, developing and managing luxury upscale hospitality, commercial and residential assets.

For the year ended March 2017, the company’s turnover stood at Rs 950 crore with earnings before interest, depreciation, tax and amortisation (EBIDTA) of Rs 350 crore.

About 15 companies have raised Rs 20,438 crore from the market so far this year compared to Rs 67,147 crore by 36 companies last year.

Chalet Hotels predominantly holds hospitality assets, along with retail, commercial and two residential assets in Mumbai, Hyderabad and Bengaluru. The K Raheja Corp Group recently proposed to bring all the assets in a similar line of business under Chalet Hotels for better efficiency and a leaner structure.

Chalet Hotels has long-term management contracts with established global brands such as Sheraton (Starwood Hotels and Resorts), Westin and JW Marriott (Marriott Hotels India Private Limited) for its hotel properties.

Following a recent merger, Chalet Hotels owns five operational properties such as Renaissance Mumbai Hotel and Convention Centre, Four Points by Sheraton, Westin Hotel, Hyderabad, J W Marriot, Mumbai; and Bengaluru Marriott Hotel Whitefield.

Under the JW Marriott brand, further retail space is likely to be operational this year and commercial space is likely to be operational next year at Sahar near the Mumbai international airport.

Chalet Hotels has two residential projects: a completed one in Hyderabad and other in Bengaluru. It also operates an under-construction IT commercial space project at Whitefield, Bengaluru.