ITC hotel spinoff at 10:1 ratio, IPO in 15 months

The board of ITC Ltd on Monday approved a proposal to demerge the company’s hotel business and separately list it on the stock exchanges within 15 months.

As per the 10: 1 share entitlement ratio approved by the board, every person holding 10 ordinary shares of ITC will be entitled to one share of the demerged company, according to ITC.

The company clarified that ITC shareholders would hold around 60% direct stake in the new hotel entity (proportionate to their stake in ITC). The remaining 40% stake would remain with ITC.

ITC’s hotel business includes ownership, licensing and management of several hotel properties, and providing services including accommodation, dining and banqueting services.

In addition, the board of directors of the cigarette-to-hotel conglomerate has also approved its investments in two firms including buying a 45% stake in International Travel House Ltd (ITHL) and 25% of Maharaja Heritage Resort. Maharaja Heritage is a joint venture between ITC and Jodhana Heritage. This entity operates hotels under WelcomHeritage brands and is in 36 locations currently.

ITHL, on the other hand, is a subsidiary of ITC and runs a corporate travel business including air ticketing, car rentals, destination management services, etc.

ITC has a majority 75% stake in ITHL. The remaining 25% of ITHL is owned by Russell Credit Ltd, which is also a wholly owned subsidiary of ITC.

The company said its hotel business has matured over the years, and will likely chart its own growth and operate as a separate listed entity in the industry. This, while, still being separate, will give it access to its larger institutional strengths, it said.

In the last fiscal FY23, at a consolidated level, the hotels business had a segment revenue of ₹2,689.12 crore and a gross revenue of about ₹557.31 crore.

It operates under six brands including Storii, Fortune and WelcomHeritage, and has 115 hotels in about 80 destinations in the country. The company has a marketing tie-up with American hospitality major Marriott International since 2019, which markets about 4,500 of its rooms in 14 hotels on its popular loyalty programme Marriott Bonvoy. It owns about 15 hotels and assets like a golf course in Gurugram.