New Delhi: Tourism Finance Corp. of India Ltd (TFCI), which has funded the world’s top-rated spa, plans to sell shares and set up a $100 million (Rs393 crore) private equity fund to buy stakes in hotels catering to domestic travellers, its chairperson said.
The money for the seven-year fund will be raised from banks and high net worth individuals, Archana Capoor, chairperson and managing director, said. TFCI plans to sell new shares to select investors to more than double its equity capital.
A doubling in India’s middle class to 50 million in the past decade has spurred demand for hotels and resorts, driving an almost threefold rise in TFCI’s shares this year. ITC Ltd, the Indian partner of Starwood Hotels & Resorts Worldwide Inc., is expanding its brand of cheaper lodgings to 100 to tap demand in smaller towns.
“The future growth is not in the eight big cities, the growth is in the smaller towns,” said Capoor. “If someone wants to set up a chain of hotels, it’s one of the best models. You can’t have all your eggs in one basket.”
TFCI has lent money to IHHR Hospitality Ltd, which operates the Ananda in the Himalayas, rated as the best destination spa this year by the readers of Conde Nast Traveller magazine. The spa resort is located 260km north of New Delhi. TFCI plans to sell new shares to increase its equity capital to as much as Rs150 crore from Rs67 crore, Capoor said. Directors will make a decision on 22 October, she said, without giving the number of shares to be sold.