Carlyle, 3i Group and Warburg Pincus are in the race to pick up around 20% stake in Indian Hotels Company's wholly owned subsidiary Roots Corporation. It is planning to raise $75-100 million for expansion of its no-frills hotel chain Ginger, as per this report.
Roots, which is part of the Tata Group, had reworked its strategy under rising realty prices and is looking at models such as opening hotels in shopping malls and participating in management contracts. It had recently opened Ginger Rail Yatri Niwas at New Delhi Railway Station, for which it won the contract from IRCTC to renovate and operate it for a 15 year period. Ginger currently has a network of 16 hotels and plans to increase it to 70 by 2011.
Warburg Pincus seems to be sniffing around for a hotel deal in India. In July it was reported to be in talks with Kochi-based Casino Group of Hotels (CGH) to invest Rs 325 crore. It already has a hotel in its India portfolio as it had invested in Delhi-based Lemon Tree Hotels, picking up a 27% stake for Rs 280 crore in 2006.
Budget Hotels in India
Quite a few new players are planning to foray into the budget hotels segment. Capt GR Gopinath, who started the country's first low-cost airline, is planning to open a chain called Deccan Hospitality and is talking to private equity players for investment. New York-based Berggruen Holdings' Indian hospitality venture Berggruen Hotels is also in the process of setting up the their brand of boutique budget hotels called "Keys" in India. It plans to set up 38 budget hotels over the next five years at an investment of $100 million.
Walton Street Capital, a US-based real estate private equity fund, has invested in Shriram properties which is opening up 70 budget hotels. Others like Sarover Hotels and Emaar are also making a foray into this segment.