Mumbai: Apeejay Surrendra Park Hotels Ltd, which operates luxury boutique hotels under ‘The Park’ brand, has filed its draft red herring prospectus for a ₹1,000-crore initial public offering (IPO).
The initial share sale comprises a fresh offer of ₹400 crore, which will be used to repay debt and for general corporate purposes, while the remaining shares worth ₹600 crore will be sold by its existing investors and promoters, including shares worth ₹125 crore by Apeejay Surrendra Trust, about ₹355 crore by Apeejay Pvt. Ltd, ₹84 crore by Apeejay House Pvt. Ltd and ₹33 crore by RECP IV Park Hotel Investors Ltd.
At present, Apeejay promoters, Karan and Priya Paul, hold 17.18% in the company through Apeejay Surrendra Trust, and Flury’s Swiss Confectionery owns 30.06%.
Other promoter group selling shareholders, such as Apeejay owns 19.75% and Apeejay House, own 8.3% in the firm. Its private equity investor, RECP IV Park Hotel Investors—a Mauritius-based investment vehicle owned by global investment bank Credit Suisse— which invested in the firm in 2007, holds a 7.82% stake.
Investment banks ICICI Securities, Axis Capital and JM Financial are managing the share sale.
Founded in 1987 as Budget Hotels Ltd, the Karnataka-based company was acquired by Apeejay Hotels Delhi in 1999. Today, the firm manages 22 hotels across 15 cities in the country, with 1,937 rooms. It is present in Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and Delhi-NCR (National Capital Region). The company also operates a retail food and beverage business segment under the ‘Flurys’ brand, with 38 outlets in Kolkata, and one outlet each in Navi Mumbai and New Delhi.
The company, according to its draft prospectus, is ramping up its presence by upgrading two of its existing hotels and adding one more, besides including 10 managed hotels and one leased hotel to its portfolio. Its pipeline consists of 1,536 rooms, which are expected to start operations within the next three years.
In 2018-19, the firm’s total income of ₹430.9 crore was nearly 11% higher compared to the previous fiscal year, while its gross operating profit rose 15% to ₹114.2 crore during the period.
The hotel business had revenue per available room of ₹4,876 in fiscal 2019, besides an 89.7% room occupancy rate. It generated revenue of ₹178.9 crore from the sale of food, beverage, wine and liquor during the period.
Its plans to go public following the successful listings of other hotel companies such as Lemon Tree Hotels Ltd and Chalet Hotels Ltd.
Lemon Tree went public in March 2018 raising ₹1,039 crore through its initial share sale, while Chalet Hotel secured ₹1,641 crore in its public offering in January 2019. From its issue price to till date, Chalet Hotels gained 22.27% to ₹342.35 and Lemon Tree Hotels gained 13.04% to ₹63.3.
A couple of other hospitality companies have also expressed their intention to list on the bourses.
In September, Goldman Sachs-backed hotel owner and asset manager SAMHI Hotels Ltd filed the draft papers for its initial public offering, which could see the company raise ₹1,800-2,000 crore. 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 has two hotels under development with 223 rooms in Kolkata and Mumbai, which are expected to be commissioned by September 2020 and March 2021, respectively. Bharat Hotels, which runs five-star properties under The LaLiT brand, had filed its draft IPO prospectus in July 2018, but did not go ahead with the proposed public offering.