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IFC may invest up to $21M in SAMHI Hotels

International Finance Corporation (IFC), the private sector investment arm of World Bank Group, is planning to make an equity investment of up to $21 million in SAMHI Hotels Private Ltd, according to a disclosure by IFC.

This capital will be part of a larger expansion plan to invest $84 million to build and buy hotels. In this, the company will raise $38 million equity and rest $46 million through debt.

This capital will be used by the company to develop and acquire assets in tier I and II cities in the country.

SAMHI Hotels is involved in development and ownership of portfolio of hotels across the country in economy, midscale and upscale segments. These hotel properties are operated by global hotel operators like Starwood, Marriott, Accor and Hyatt.

The company has also formed joint ventures with Marriott where it holds 67 per cent and Accor where it holds around 60 per cent. Under these two joint ventures, the company is developing hotels under Fairfield and Formule 1 brands.

Through its own development projects and joint ventures the company has 27 hotels of which seven are operational, 17 are under development and three acquisitions are in the pipeline.

While the company has been looking at greenfield development, it has recently started deploying a large amount of its capital for inorganic expansion. The company recently acquired Royal Orchid’s Regenta One hotel for Rs 179 crore and in 2012, it acquired Royal Orchid’s hotel in Ahmedabad for Rs 67 crore.

The company raised Rs 126 crore in additional funding from its founders and existing investors - GTI Capital and Equity International.

Both PE majors control around 95 per cent of the company where GTI controls around 25 per cent and Equity International controls around 70 per cent. In 2012, SAMHI raised $75 million from Equity International and $25 million from GTI Capital.

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