Apeejay Surrendra Park Hotels Ltd, which owns and operates hotel under the brand name ‘The Park’, has filed a draft prospectus with the Securities and Exchange Board of India for an initial public offering.
The issue size is pegged at Rs 1,000 crore. It comprises a fresh sale of shares worth Rs 400 crore and a Rs 600-crore secondary sale of shares by the company’s promoter as well as private equity investor RECP IV Park Hotel Investors Ltd, which is housed under Swiss multinational investment bank Credit Suisse.
Promoter group companies Apeejay Surrendra Trust, Apeejay Pvt. Ltd and Apeejay House Pvt. Ltd have proposed to sell shares worth Rs 565 crore. RECP IV will sell shares worth roughly Rs 35 crore, according to the prospectus.
While the exact details could not be ascertained, the IPO will result in roughly 25% stake dilution. It could value the company at roughly Rs 4,000 crore, a person familiar with the matter told VCCircle.
A successful IPO and listing will see Park Hotels join listed peers such as Oberoi hotel operator EIH Ltd (Rs 8,293 crore market capitalisation), Taj hotel owner Indian Hotels Co Ltd (Rs 17,363 crore), K Raheja-promoted Chalet Hotels (Rs 6,958 crore) and Lemon Tree Hotels (Rs 4,999 crore).
Gurugram-based SAMHI Hotels Ltd, which owns the largest number of Marriot, IHG and Hyatt hotels in India, is also floating an IPO. It filed its IPO proposal in September and received SEBI clearance on 29 November.
SAMHI Hotels counts billionaire entrepreneur Sam Zell's Equity International, World Bank arm International Finance Corporation, GTI Capital and global financial services firm Goldman Sachs as its investors.
Here’s a snapshot of the proposed IPO by Park Hotels:
Use of proceeds
The company will use Rs 300 crore out of the fresh net proceeds to repay loans and use an undisclosed amount toward general corporate purposes. The proceeds from the secondary sale will go to the selling shareholders.
ICICI Securities, Axis Capital and JM Financial are the merchant bankers managing the share sale.
AZB & Partners is the legal counsel representing the company, promoter and promoter group. Shardul Amarchand Mangaldas & Co is the legal counsel to RECP IV. Khaitan & Co is the legal counsel to the merchant bankers.
Incorporated as Budget Hotels Ltd in 1987, the company counts itself among India’s 10 hospitality companies in the upscale segment. It also operates luxury boutique hotels under the ‘The Park’ brand.
Apeejay Surrendra Park Hotels is part of the Apeejay Surrendra group, which has businesses in the hospitality, shipping, tea, real estate and education sectors. The group also owns retail brands such as Oxford bookstores.
The company has been managing hotels for more than 50 years. Its hotels are housed under three brands - The Park, The Park Collection and Zone by The Park.
It owns and operates 22 hotels with 1,937 rooms. It has a presence in 15 cities Indian cities including Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and Delhi.
Besides the hotels vertical, the company operates a retail food and beverage business under the brand ‘Flurys’. The company operates 38 Flurys outlets in Kolkata, and one each in Navi Mumbai and New Delhi.
The company derived 41.53% of its total revenue from the sale of food, beverages, wine and liquor.
Apeejay Surrendra Park Hotels clocked a loss of Rs 1.83 crore for the three months ended June 2019 on revenue of Rs 93.98 crore.
For the financial year ended March 2019, it posted a net profit of Rs 9.71 crore on revenue from operations of Rs 421.29 crore. This compares with a loss of Rs 7.89 crore for 2017-18 on revenue of Rs 382.88 crore.