Apeejay Surrendra Park Hotels Ltd, which owns and operates hotel under the brand name ‘The Park’, has received regulatory nod to float an initial public offering (IPO).
The Securities and Exchange Board of India (SEBI) issued final observations to the company’s IPO plan on March 9, according to information published on the regulator’s website.
This takes the number of companies to have received regulatory clearances so far this year to 13. SEBI had cleared 28 IPO proposals last year, 72 in 2018 and 46 in 2017.
The hotel company had filed its draft prospectus with SEBI on December 31. The issue size is pegged at Rs 1,000 crore, comprising a fresh sale of shares worth Rs 400 crore and a secondary sale of shares worth Rs 600 crore by the company’s promoter as well as private equity investor RECP IV Park Hotel Investors Ltd, which is housed under Swiss 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 the company join listed peers such as Oberoi hotel operator EIH Ltd (Rs 5,112.69 crore market capitalisation), Taj hotel owner Indian Hotels Co Ltd (Rs 12,921.29 crore), K Raheja-promoted Chalet Hotels (Rs 5,013.86 crore) and Lemon Tree Hotels Ltd (Rs 2,915.47 crore).
Gurugram-based SAMHI Hotels Ltd, which owns the largest number of Marriot, IHG and Hyatt hotels in India, is also planning to float an IPO. It filed its IPO proposal in September and received SEBI clearance in 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.
Apeejay Surrendra Park Hotels 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.
Incorporated as Budget Hotels Ltd in 1987, Apeejay Surrendra Park Hotels counts itself among India’s 10 hotel companies in the upscale segment. It also operates luxury boutique hotels under ‘The Park’ brand.
It 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 beverages 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.