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Sam Zell-backed SAMHI Hotels gets SEBI nod to float IPO
Photo Credit: VCCircle

Gurugram-based SAMHI Hotels Ltd, which owns the largest number of Marriot, IHG and Hyatt hotels in India, has received regulatory nod to float an initial public offering (IPO). 

The Securities and Exchange Board of India (SEBI) issued final observation to SAMHI Hotels’ IPO proposal on November 29, according to information published on the capital markets regulator’s website. 

This makes SAMHI Hotels the 26th company to receive regulatory clearance this year for an IPO. SEBI had cleared 72 IPO proposals last year and 46 in 2017. 

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. 

The company had filed its draft prospectus with SEBI on September 24.

SAMHI intends to raise Rs 1,100 crore in fresh capital through the IPO. The offering also includes a secondary sale by Equity International, IFC, GTI Capital and Goldman Sachs. 

SAMHI may also consider raising Rs 400 crore by issuing fresh shares in a pre-IPO round or in a rights issue to existing shareholders via a private placement. The overall IPO size is pegged at Rs 2,000 crore. 

Equity International, which is invested through Singapore investment arm Blue Chandra Pte Ltd, is the largest shareholder in the company with a 49.35% stake. It will sell roughly one-fourth of its stake in the proposed IPO. Goldman Sachs and GTI Capital will trim about a fifth of their respective stake.

IFC may sell a little under one-fifth while SAMHI co-founder and chairman Ashish Jakhanwala and non-executive director Manav Thadani will sell a small chunk of their respective holdings. 

The IPO may value the hotel company around Rs 5,000-5,500 crore, according to VCCircle estimates. 

SAMHI joins Lemon Tree Hotels, Bharat Hotels and K Raheja-promoted Chalet Hotels in taking the IPO route. 

Lemon Tree, which was backed by US private equity giant Warburg Pincus, was the first among the recent hotel chains to go public in March 2018, followed by Chalet Hotels in January this year. 

Lemon Tree has a market capitalisation of around Rs 4,836.66 crore while Chalet commands a market capitalisation of Rs 7,080.50 crore. 

Delhi-based Bharat Hotels, which operates around 12 luxury hotels, palaces and resorts under The LaLiT brand, let its IPO proposal lapse after receiving a go-ahead from SEBI in October 2018. SEBI approvals are valid for one year.

Other listed peers in the hotel and hospitality industry include the Indian Hotels Co Ltd – the Tata Group subsidiary and the operator of Taj group of hotels – with a market capitalisation of Rs 17,684.27 crore and EIH Ltd with a market capitalisation of Rs 8,962.21 crore. 

Kotak Mahindra Capital Co, CLSA India, DSP Merrill Lynch and Goldman Sachs (India) Securities are merchant bankers arranging SAMHI’s share sale.

SAMHI will use the part of the fresh proceeds to repay debt, pay accrued interest on the convertible debentures allotted to IFC and for general corporate purposes which include growth opportunities.

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