Private equity firm Clearwater Capital Partners has increased its stake in Sayaji Hotels to 32.87% after the conversion of foreign currency convertible bonds (FCCBs). The New York-based special situations fund held FCCBs worth $7.5 million in the Vadodara-based Sayaji, where it already held a little more than 8% stake. The board of the company also approved this transaction, Sayaji said in a filing today.

This development comes just before Clearwater's open offer for another 20% stake in the firm starts next week. Clearwater's open offer period is between May 20 to June 8, and the offer is made at Rs 110 per share, Sayaji Hotels said in a stock exchange filing. The shares of the firm closed on Tuesday at Rs 120 per share, up by 1.69%.

Clearwater could end up with more than 52% stake if the open offer is completely successful, which could make it the largest shareholder. US-based foreign institutional investor (FII) Acacia Partners has a 10% stake through its various funds as of March 2010 in Sayaji. The promoter group currently holds 52% stake, of which 90% has been pledged, according the BSE.

Sayaji Hotels also announced its results today, with a total income Rs 158 crore and net loss after tax of Rs 35 lakh for FY10. This as compared to revenues of Rs 112 crore and a loss of Rs 2.84 crore.

Sayaji operates three properties in Vadodara, Indore and Pune. It has two subsidiaries, Barbeque Nation Hospitality and Malwa Hospitality.

A special situation or distressed fund, Clearwater, is quite active in the India and other Asian markets with investments in auto, manufacturing and engineering space. In November last year, the firm has invested Rs 35 crore in Oricon Enterprises, a Mumbai-based manufacturer of packaging products.

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