The Xander Group-backed hospitality firm Sinclairs Hotels Ltd has acquired majority stake in Savannah Hotels Pvt Ltd that owns Savannah Sarovar Premiere, an upscale 104-room business hotel in Whitefield, Bangalore, for an undisclosed sum.
Subsequent to the deal, two new directors representing Sinclairs and three independent directors have been inducted into the board of Savannah Hotels.
Navin Suchanti, CEO and MD of Sinclairs Hotels Ltd, said, “This new acquisition is in line with our strategy to achieve accelerated growth through thoughtful acquisition of operating hotels. Backed by strong fundamentals and the strength of our private equity partner, the Xander Group Inc., we are actively looking to acquire existing hotel properties in both gateway cities and their hinterland towns across India, as we continue to implement our cluster strategy, focused on the quality-conscious domestic tourist and business traveller.”
Kolkata-based Sinclairs Hotels’ scrip rose 4.96 per cent to hit the upper circuit for the day at Rs 285.55 a share on the BSE in a weak Mumbai market on Tuesday. At this price, the debt-free firm has a market cap of Rs 173 crore.
The Bangalore hotel is a strategic fit with the existing Sinclairs resort property at Ooty, which has undergone a full-scale renovation over the past 12 months and will reopen shortly. “Sinclairs’ entry in Bengaluru is a prelude to the company acquiring or developing additional properties in south India, much like the company’s approach in eastern India which has been under implementation over the last three years,” the company has disclosed on Tuesday.
On completion of the Bengaluru acquisition and the current development projects, Sinclairs’ total room inventory will increase to over 600.
Sinclairs currently owns and operates five properties in Siliguri, Darjeeling, Dooars, Port Blair and Ooty. It is also developing three additional hotels which include a 46-room luxury resort in Kalimpong, a club-and-banquet complex with a 20-room hotel in Burdwan and a 106-room premier business hotel in Rajarhat, Kolkata.
Construction at Kalimpong and Burdwan hotel sites is in advanced stages and both facilities are expected to be commissioned in 2012. Land acquisition and pre-development work for the Kolkata city hotel project is complete and construction is expected to start shortly, the company has said.
Sinclairs is also in active discussions with real estate companies to develop residential condominiums and organised retail to complement its operational hotels. This is part of its overall plan for a mixed-use city centre in the rapidly growing city of Siliguri in West Bengal.
The Xander Group Inc. had originally acquired around 26 per cent stake through a mix of preferential allotment of equity and warrants for Rs 27 crore. It had also co-invested in the company, along with Spanish private equity firm Meridia Capital (focused on the hospitality sector) and US-based Morgan Creek, nearly four years ago. These investors had picked shares at Rs 172 a piece and seen the value of their investment move up 66 per cent.
Xander also came up with an open offer after converting the warrants into equity and currently holds 32.6 per cent in Sinclairs Hotels. It mostly focuses on investments in infrastructure, hospitality, retail and real estate sectors and since 2005, the firm has committed over $1.8 billion of equity capital to the Indian market across five dedicated India funds.
Recently, the Xander Group had acquired over 5 per cent stake in Hindustan Constructions Company Ltd in a series of transactions estimated to have cost between Rs 85 crore and Rs 105 crore. This came soon after Xander picked up 14.5 per cent stake in HCC Concessions Ltd, a step-down subsidiary of Hindustan Constructions Company.
Among other deals in the hospitality space, Hotel Leela Venture recently sold its Kerala property for Rs 500 crore to NRI industrialist B. Ravi Pillai while Mayfair Hotels & Resorts acquired Oberoi’s Palm Beach property at Gopalpur-on-Sea in Orissa.
In another deal, Indian Hotels Company Ltd, the country’s largest hospitality firm that runs a chain under the Taj Hotels brand, raised its equity stake in an associate firm Piem Hotels and made it a subsidiary with an investment of up to Rs 51 crore.