Mahindra Holidays and Resorts is all set to revisit IPO market

Mahindra Holidays and Resorts is all set to revisit IPO market

Mumbai: Mahindra Holidays and Resorts India Ltd, part of auto maker Mahindra and Mahindra Ltd, is expanding its vacation ownership business to South Africa, China and West Asia, the company told the Securities and Exchange Board of India (Sebi) in its preliminary draft prospectus filed last Tuesday for the second time in six months.

The company, 93.64% owned by its parent, earned 75.7% of its revenues from vacational ownership out of the total Rs371.19 crore in March.

Vacation ownership, also referred as timeshare ownership, is essentially where the ownership or usage of a hospitality asset is sold for a predetermined duration or perpetuity.

Mahindra Holidays intends to sell the family holiday vacation ownership concept in the three countries and plans to acquire or develop resort properties, the company said.

The company is in the process of evaluating these markets and it believes an increase in member base will end up in higher revenues from these markets.

The company has two subsidiaries—one in the US, incorporated in 2003, and the other, in Austria, last year. The US company—Mahindra Holidays and Resorts USA Inc. reported a revenue of Rs4.45 crore and a net profit of Rs3.38 crore in March 2008.

MHR Hotel Management Gmbh, which manages a hotel in Austria, posted a loss of Rs4 lakh with Rs54 lakh in revenues last year.

The company is in a “quiet period" after filing the draft public offer prospectus. The company, which has 79,699 ownership members who use their 27 resorts and 11 properties, is planning to raise nearly Rs500 crore by issuing 9,265,275 equity shares at a face value of Rs10. The premium on the equity share will be decided after the market regulator vets its proposal.

Mahindra Holidays says it will use Rs189.92 crore from the public issue to expand existing projects and to build fresh resorts and holiday homes in the next three years.

The parent company will sell 3,369,191 equity shares in Mahindra Holidays in the public offer and raise money by paring its stake by 10.55% to 83.09%.

The company had sold 2.11% of its stake to State Bank of India for Rs78.99 crore and 1.05% to Nylim Jacob Ballas India Fund III, Llc. for Rs39.5 crore at Rs479 a share last year.

Mahindra Holidays increased its net profit by 97.6% to Rs84.04 crore in March from Rs42.53 in the previous year.

The company plans to build more resorts and holiday homes in India and simultaneously look at opportunities in developing markets.

Rising incomes have increased the number of holiday takers in India from 2% of the total population between 2000 and 2006 to 4.5%, a study by Euromonitor International, a data provider.