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Phoenix Mills To Shed 30% In Hopsitality Arm To PE Funds For $250M

20 August, 2008

Mumbai-based real estate developer Phoenix Mills Ltd plans to sell up to 30 per cent stake in its hotels arm Phoenix Hospitality Pvt Ltd to private equity investors for about $250 million, reports Reuters, quoting Mahesh Iyer, Chief Financial Officer, Phoenix Mills. The report adds that Phoenix is in talks with about five investors for offloading the stake and expects to close the deal in three to four months.

The name of the potential investors in Phoenix Hospitality are not known. The company has been valued at over $800 million. Phoenix Mills currently holds 75 per cent stake in the company, while the balance is held by the founders, the Ruia family, which will also be subsequently transferred to it.

Iyer told Reuters that the funds will take care of their liquidity needs for the next five years. The company is developing a 400-room luxury hotel in central Mumbai at a cost of Rs 800 crore. It will be managed by Hong Kong’s Shangri-La Hotels.

Earlier media reports have suggested that Shangri-La, the Hong-Kong based hospitality major, might take a stake in Phoenix Mills Ltd. Phoenix also has plans of developing seven other hotel projects across the country, and will eventually add four more, says the report.

The parent company Phoenix Mills already has investment from the Euronext-listed Indian real estate fund Yatra Capital Ltd. Yatra invested €3.73 million in Phoenix Mills, a real estate development company listed on Indian stock exchanges. Yatra had acquired 126,756 shares for €29.27 (Rs 1600) per share, at a discount to the market price of €5.48 (Rs 300) per share. This gave Yatra a 0.88 per cent stake in Phoenix Mills, which recently merged with Ashok Ruia Enterprises Pvt Ltd. The company is currently involved in seven retail led developments of 15 million square feet. Besides Yatra, other investors like Deutsche Bank and Americorp have also invested in Phoenix Mills.


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Phoenix Mills To Shed 30% In Hopsitality Arm To PE Funds For $250M

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