Private equity major Warburg Pincus will acquire a 41.09 per cent stake in Lemon Tree Hotels’ subsidiary company, Fleur Hotels, from APG Strategic Real Estate Pool NV. Additionally, the PE firm will invest Rs 960 crore in the company in several tranches
In an exchange filing, Lemon Tree Hotel said that Coastal Cedar Investment BV, an affiliate of Warburg Pincus, will do the acquisition. Lemon Tree Hotels’ board has approved the execution of a share purchase agreement enabling the acquisition.
The company’s board has also approved execution of an agreement providing for a primary investment of up to Rs 960 crore by Warburg Pincus in tranches, to support the future growth of Fleur, which will be listed separately on the exchanges.
Lemon Tree said the strategic reorganisation and investment from Warburg in Fleur will unlock long-term shareholder value by creating two focused, high-growth, and large-scale platforms.
Lemon Tree Hotel reorganisation plan
The company stated that the board has approved the proposal for strategic reorganisation, which will create two clearly differentiated and complementary platforms: Lemon Tree Hotels Limited, a pure-play, asset-light hotel management and brand platform; and Fleur Hotels Limited, a large-scale, growth-oriented hotel ownership platform with development capabilities and an attractive pipeline.
The respective boards of Lemon Tree and Fleur approved a composite scheme of arrangement designed to simplify the group structure, enhance strategic focus, and unlock long-term value for shareholders.
“The scheme, to be implemented through an NCLT-approved process, will reorganise the group’s asset ownership and operating structure. The hotel assets currently owned by Lemon Tree will be transferred to Fleur, which will serve as the group’s exclusive asset ownership and development company,” Lemon Tree stated.
Listing of Fleur Hotels
The scheme will also result in a listing of Fleur’s shares on NSE and BSE. Patanjali Govind Keswani, Founder of Lemon Tree Hotels, will serve as the Executive Chairman of Fleur Hotels and will eventually transition to a Non-Executive role at Lemon Tree.
Post the proposed transaction, Fleur will become one of the largest owners of hospitality assets in India. Its owned portfolio will expand significantly, increasing from 3,993 keys and 24 operating hotels to 5,813 keys across 41 hotels, Lemon Tree said.
Fleur will lead the group’s future hotel acquisitions and development. At the same time, Lemon Tree will transition to a fully asset-light model, focused on growing its hotel management, franchising and digital business, it added.
“This scheme is intended to create a simplified, transparent, and growth-oriented structure for both companies, which we believe will enhance long-term value for our shareholders,” Keswani said.
The entire process of listing Fleur is expected to be completed within 12 to 15 months.
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