In a move that is significant for the travel and leisure industry in the country, foreign institutional investors (FIIs) may soon pick up around 14% stake in leisure travel operator Cox & Kings.

The company plans to allot warrants, redeemable non-convertible debentures, equity shares and convertible securities to non-resident qualified institutional buyers through a QIP aggregating to R1,500 crore. The entire fund-raising exercise will lead to the dilution of around 18% of the fully diluted paid-up equity share capital of the company. According to government sources, Cox & Kings has sought the approval of the Foreign Investment Promotion Board (FIPB) in this regard. The move comes within months after the company?s board approved increasing the borrowing limit to R1,500 crore from the current R1,000 crore in end-April.

Sources said Cox & Kings plans to use the proceeds for acquisitions, launch of new businesses apart from funding its current operations. Besides leisure travel services, the company also operates in the areas of corporate travel, visa processing and foreign exchange services.

The allotment of warrants to the qualified institutional buyers is expected to be on a private placement basis and each warrant holder wil pay an option price decided by the company in consultation with a merchant banker appointed by the company, sources said. Cox & Kings will issue around 1.5 crore equity shares of R5 each in lieu of the warrants and convertibles.

Recently, the company announced its financials for the 2010-11 fiscal. The company?s consolidated income from operations in FY11 grew by 24% to R496.74 crore against R399.15 crore in FY10. Consolidated profit after tax for the year ended March 31, 2011 grew by 13% to R120.30 crore as compared to R106.43 crore in the corresponding period of FY10 fiscal.

According to experts, the Indian travel industry is growing at 20-25% annually and Indians are collectively spending in excess of R4,000 crore towards leisure travel and holidays. ?Look at the business of leisure travel firms. The growth has been phenomenal considering the set backs in Egypt and other countries earlier in the year which did impact the travel and tourism industry across the world. Most of these operators are looking at acquisition across south-east Asia and eastern Europe and that is why funds are being raised,? a senior analyst of a brokerage firm said requesting anonymity. The company also owns Tempo Holidays Australia, East India Travel Company in North America, ETN in the UK and Quoprro Global Services (visa processing). In December 2009, the company also acquired MyPlanet Australia and Bentours International in Australia.

Cox & Kings is one of the oldest travel companies employing around 1,400 professionals in India. The company has 14 branch offices across all major towns and a business network across 20 states. The company also has subsidiaries in the UK, Australia, Germany, Japan, New Zealand, Singapore, UAE and US.