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Schloss Bangalore Ltd, which owns and operates Leela Palaces, Hotels & Resorts, is set to launch what could become the largest IPO in India's hospitality sector. The IPO price band has been fixed between INR 413 and INR 435 per share, targeting total proceeds of INR 3,500 crore. The issue comprises a fresh equity issue of INR 2,500 crore and an offer for sale worth INR 1,000 crore by promoter Project Ballet Bangalore Holdings (DIFC) Pvt Ltd. Backed by Brookfield Asset Management, the company plans to utilise the funds to reduce debt and support corporate purposes. It operates a luxury portfolio of 12 hotels under the Leela brand and has shown robust financial growth recently.
Schloss Bangalore Ltd, the company behind the iconic Leela Palaces, Hotels & Resorts, announced earlier this week that it has finalised a price band ranging from INR 413 to INR 435 per share for its forthcoming initial public offering (IPO) worth INR 3,500 crore. Advertisement
This offering is poised to be the largest ever IPO in the Indian hospitality sector.
Public subscription for the IPO is slated to be open over a three-day window later this month, while bidding for anchor investors was scheduled to take place earlier this week, according to a company statement.
The IPO comprises two components: a fresh equity issue of INR 2,500 crore and an offer for sale (OFS) of INR 1,000 crore by the promoter entity, Project Ballet Bangalore Holdings (DIFC) Pvt Ltd, as detailed in the red herring prospectus (RHP). At the upper end of the price band, the company's valuation exceeds INR 14,500 crore, as per brokerage estimates.
Backed by global investment firm Brookfield Asset Management, Schloss Bangalore intends to deploy the fresh issue proceeds towards repaying debt held by the company and its subsidiaries, as well as for general corporate purposes. The company's borrowings had crossed INR 3,900 crore as of the end of the financial year.
Renowned for its upscale hospitality under the Leela branding, Schloss Bangalore had a portfolio comprising 3,382 keys across 12 operational properties as of the end of May. The portfolio spans major Indian cities and includes Leela Palaces, Leela Hotels, and Leela Resorts.
Financial performance has seen a marked improvement, with EBITDA climbing from INR 87.72 crore in FY22 to INR 600.03 crore in FY24-demonstrating the company's accelerating growth trajectory.
A report by hospitality consultancy HVS stated that the Indian hospitality sector is on track for solid expansion, supported by expectations that the country's GDP could almost double to USD 7.1 trillion by 2030, from USD 3.6 trillion in 2023.
The luxury segment, which currently represents only 17 per cent of the branded hotel market, remains significantly under-penetrated. Demand for luxury accommodation is projected to grow at an annualised rate of 10.6 per cent from FY24 through FY28, while supply growth is expected to lag at 5.9 per cent.
In addition, domestic and foreign tourism is forecasted to increase, with annual growth rates of 13.4 per cent and 7.1 per cent, respectively, up to 2030, the report added.
Allocation for the IPO has been structured with 75 per cent reserved for qualified institutional buyers, 15 per cent for non-institutional investors, and 10 per cent for retail participants. Investors will be required to bid for a minimum of 34 equity shares and in multiples of 34 thereafter.
The IPO is being managed by a consortium of 11 merchant bankers, including JM Financial, BofA Securities India, Morgan Stanley India Company, J.P. Morgan India, Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, IIFL Securities, ICICI Securities, Motilal Oswal Investment Advisors, and SBI Capital Markets.
The company's shares are anticipated to debut on the stock exchanges early next month.
The timing of this public issue aligns well with sector-wide optimism, particularly as India's economic outlook and tourism figures continue to improve. This offering may well set the tone for similar listings in the hospitality domain, reshaping investor sentiment and expectations.
Source - PTI
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