India Hospitality Corp (IHC), which owns Mars chain of restaurants and runs one of the largest airlines catering companies-SkyGourmet, is in the process to raise Rs 1,000 crore from foreign institutional investors to fuel its future acquisitions. The money, expected to be raised over the next three years, will be used to create an independent asset fund. IHC will control the fund. “The asset fund will be non-dilutive in terms of stake and the ownership of the fund will sit outside the company,” Ravi S Deo, managing director and CEO, IHC, told FE.
The company, which manages food joints like Not Just Jazz By The Bay and Pizzeria among others, is now aggressively trying to expand its hotels portfolio under the Gordon House Hotel brand. ?We are already in talks with ten properties for their complete ownership control,? said Deol. He added that this is the best time to raise funds, as asset valuations in the country are soft.
IHC is targeting around 3,000 hotel rooms in the next three years. After its tie-up with real estate firm Entertainment World Developers Pvt Ltd (EWDPL), where it will manage 10 upcoming hotel properties along with infusing Rs 100 crore in those properties, the company has around 1,200 rooms under its name. The partnership, which also involves EWDPL picking up around a 15% stake in IHC, was announced on Tuesday.
According to industry experts, the model IHC is adopting to raise money and fund its acquisitions will be a first-of-its-kind for the Indian hospitality industry. ?Considering that the amount is huge, it might be difficult to raise. However, IHC might score for its strong management team and professionally run business model,? said an analyst who did not wish to be named. IHC reported revenues of Rs $36.16 million in 2008-09.
The company is in the lookout for individual properties primarily in tier-II cities of the country. The new properties would be branded under either the Gordon House Hotel or the recently launched brand, You, depending on market requirement, said Deol.
In 2007, IHC had acquired Mars Restaurant, a hotel & restaurant company with around 13 food chain brands under it. It had also acquired control of airline catering businesses, SkyGourmet and Mars Catering Services. Hayground Cove and Navis Capital have 54% stake in the company. Their total invested capital is $56 million.