Lehman Brothers Inc. and US-based hedge fund Och-Ziff Capital Management Group Llc. have signed a $200 million (Rs796 crore) deal with the Kishore Biyani promoted Future Capital Holdings to invest in hotel projects in India, in an effort to tap into the ongoing hospitality boom in a country that does not have enough hotel rooms to meet the needs of its expanding economy.
Both Lehman and Och-Ziff will invest $100 million each in a chain of four- and five-star hotels that Future Capital plans to build as well as invest in hotel projects across various Indian cities, according to a person familiar with the deal who did not wish to be identified.
Hospitality sector: Chief executive officer of Future Group and managing director of Pantaloon Retail India Kishore Biyani.
This person said Future Capital, a unit of India’s largest listed retailer Pantaloon Retail (India) Ltd, will deploy the $200 million in various hotel projects in the next 12 months and raise approximately another $300 million from investors in the next three to five years.
A spokesperson for Future Capital declined to comment. Raj Sundaram, the head of Lehman’s real estate practice in India also declined to comment.
Earlier this year, Future Capital said that it would launch a private equity fund to invest in hotel projects and added that it planned to form partnerships with multinational hospitality firms for the venture.
Ministry of tourism estimates that the country will need an additional 150,000 hotel rooms in the next three years.
Meanwhile, Future Capital has filed the draft red herring Prospectus with Securities and Exchange Board of India to raise an undisclosed amount by diluting about 10% of its stake.