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Brookfield finally checks in at Hotel Leelaventure, marking hospitality debut
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Canada’s Brookfield Asset Management Inc. has completed its acquisition of luxury hotels from Hotel Leelaventure Ltd to mark its entry into the Indian hospitality sector with a brand that competes with the likes of Indian Hotel Co. Ltd’s Taj Hotels and EIH Ltd’s Oberoi Hotels.

The Mumbai-based hotel chain has sold four of its hotels located in New Delhi, Bengaluru, Chennai and Udaipur along with a land parcel in Agra. The deal, first announced in March, excludes its fifth property, located in Mumbai and a land parcel in Hyderabad.

The hospitality firm told stock exchanges that it received Rs 3,950 crore ($556.9 million) from Brookfield on October 16 for the deal to repay its loans to banks and financial institutions.

As part of the deal, the promoters and promoter group companies have also completed the transfer of the Leela brand and trademarks in the hotels and hospitality segment to Brookfield for Rs 150 crore.

Following the transaction, Leelaventure also announced the resignation of its president Rajiv Kaul and chief financial officer Rajan Shah. The company has appointed Umesh Dombe as the chief financial officer with effect from October 23, it said. 

The announcement comes nearly a month after the Securities Appellate Tribunal (SAT) dismissed an appeal by ITC Ltd, which owns a 7.92% stake in Hotel Leelaventure, challenging the sale of Leelaventure’s assets to Brookfield. 

Before SAT, ITC had challenged the deal before the Securities and Exchange Board of India (SEBI), citing oppression of minority shareholders and corporate governance issues by Leelaventure, its promoters and 26% equity shareholder JM Financial Asset Reconstruction Company. It had also approached the bankruptcy tribunal demanding a waiver of the requirement to hold not less than one-tenth of the issued share capital of the company. ITC's waiver petition is pending before the tribunal.

The Bombay High Court has also dismissed an appeal filed by Airports Authority of India (AAI) that challenged the deal with Brookfield. 

Brookfield

Brookfield had been in talks with Hotel Leelaventure's promoter Nair family since last year to buy the four luxury hotels. Apart from Brookfield, a consortium of investors including Blackrock, SSG Capital and RB Capital were also reportedly in the fray for acquiring the hotel chain. In January 2019, it was reported that Dubai-based billionaire Rashid Al Habtoor had bid Rs 4,200 crore for the hotel chain.

The Canadian firm has struck a bunch of deals in India’s real estate and infrastructure sectors.

Overall, the firm has ploughed nearly $2.5 billion into India’s commercial real estate segment so far.

Currently, the investor is developing four to five million square feet of commercial properties in India including the Waterstones hotel in Mumbai and around 1.5 million square feet of an office park in Pune.

On Monday, a report suggested that Brookfield was looking to buy school chain Sri Chaitanya from its promoters and private equity firm New Silk Route.

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