Clearwater Capital Makes Open Offer For Kamat Hotels' Stake

12 January, 2012

Private equity firm Clearwater Capital Partners has made an open offer to increase its stake in the hospitality company Kamat Hotels India Ltd (KHIL). The open offer for another 26 per cent stake comes as Clearwater has converted its foreign currency convertible bonds (FCCBs) during the last two months. This has resulted in Clearwater’s stake in Kamat rising to more than 32 per cent, past the new open offer threshold of 25 per cent.

The deal might see Clearwater shell out up to Rs 67.01 crore if the entire 26 per cent is subscribed. The offer is being made at Rs 135 per share, which is more than Kamat’s 52-week high. The share price of Kamat Hotels hit a 52-week high today before closing at Rs 126.25, up 1.41 per cent in a Mumbai market down 0.86 per cent.

In 2010, Clearwater Capital also made an open offer, increasing its stake to 26 per cent in Vadodara-based Sayaji Hotels.

Clearwater Capital invested $18 million or Rs 79.54 crore in March 2007 through FCCBs. With Clearwater converting the FCCBs, the promoter’s stake is expected to get diluted from 65.63 per cent to 51.7 per cent. This means even if all non-promoter shareholders subscribe to the open offer, Vithal V. Kamat-led promoter group will still hold a majority stake.

Kamat is operating luxury and budget hotels, besides running catering services and time share business. It currently operates hotels under four brands – The Orchid – An Ecotel Hotel, VITS Luxury Business Hotels, Gadh Hotels and Lotus Resorts.

Kamat Hotels reported 17.4 per cent increase in revenues to Rs 120.7 crore, with net profit remaining constant at Rs 1.4 crore in FY11. For Q2 FY12, Kamat reported 6.6 per cent increase in sales to Rs 29.8 crore while profit after tax rose 2 per cent to Rs 0.16 crore.

“We believe the company’s main operating region Mumbai is yet to witness transition from occupancy-led cycle to the recovery in room rates. We expect revenue CAGR of 22 per cent in our forecast period FY11-13E on the back of addition of new rooms in Orchid Mumbai,” stated ICICI Securities in a recent report.


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Clearwater Capital Makes Open Offer For Kamat Hotels' Stake

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