Goldman Sachs-backed SAMHI Hotels files draft papers  for  up to   ₹2,000 crore share  sale

Goldman Sachs-backed hotel owner and asset manager SAMHI Hotels Ltd on Wednesday filed the draft papers for its initial public offering (IPO), which could see the company raise ₹1,800-2,000 crore.

In its draft red herring prospectus (DRHP), SAMHI said it intends to raise ₹1,100 crore in fresh capital. In addition, existing shareholders will sell 19.14 million shares through an offer for sale.

The total IPO size is expected to be worth ₹1,800-2,000 crore, one person aware of its plans said, on the condition of anonymity.

SAMHI’s investors include Goldman Sachs, World Bank arm International Finance Corp. (IFC), GTI Capital and Equity International.

As on 30 June, SAMHI had 27 operating hotels with 4,048 rooms across 12 cities for Marriott, IHG and Hyatt brands. Its hotels are spread across Delhi, Bengaluru, Hyderabad, Chennai and Pune. SAMHI currently has two hotels under development with a total of 223 rooms in Kolkata and Mumbai, which are expected to be commissioned by September 2020 and March 2021, respectively.

The hotel operator has scaled up its business largely through inorganic growth, with 83.6% of its hotel rooms, as on 30 June, being added through acquisitions.

SAMHI plans to use the fresh capital from the IPO for complete or part repayment of certain debt facilities. It plans to spend ₹950 crore on such debt repayments. In addition, it will also use ₹60.2 crore from the IPO proceeds to pay interest accrued on debentures held by its existing equity investor IFC.

As on 30 June, SAMHI’s total outstanding borrowings stood at ₹2,124.9 crore. Its major lenders include Piramal Capital through its subsidiary PHL Fininvest Pvt. Ltd, Standard Chartered Bank, IL&FS Financial Services Ltd and HDFC Ltd.

For the fiscal year ended 31 March, SAMHI reported revenue of ₹470.7 crore, as against ₹392.3 crore in the previous fiscal year. In fiscal 2019, the company reported loss of ₹303 crore, against the loss of ₹185 crore a year ago.

Using IPO proceeds to reduce debt will help improve the company’s financial performance, as finance cost forms the largest component of its expenses. In fiscal 2019, the company paid ₹225 crore in finance cost, up from ₹170 crore in the previous fiscal year.

Investment banks Kotak Mahindra Capital Company, CLSA India, DSP Merrill Lynch and Goldman Sachs are managing the initial share sale of SAMHI.

In July 2018, Bharat Hotels, which runs five-star properties under The LaLiT brand, had filed its draft prospectus with the capital markets regulator to garner ₹1,200 crore through its initial share sale.

Also in 2018, Warburg Pincus-funded hotel chain Lemon Tree Hotels Ltd went public with a ₹1,040 crore IPO.