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The Competition Commission of India has approved Warburg Pincus acquisition of a stake in Fleur Hotels Ltd, a subsidiary of Lemon Tree Hotels, along with an INR 960 crore investment plan. The deal includes the purchase of a 41.09 per cent stake from APG Strategic Real Estate Pool NV and a broader internal restructuring of Lemon Tree's business. The move aims to separate hotel ownership and management into distinct platforms, strengthen growth potential, and expand Fleur's asset base significantly, with plans for a future listing on domestic stock exchanges.
The Competition Commission of India has approved a proposal by Warburg Pincus to acquire a stake in Fleur Hotels Ltd, a subsidiary of Lemon Tree Hotels, along with an internal restructuring of the group. Advertisement
The clearance follows an announcement made earlier this year, where Lemon Tree Hotels board approved the acquisition of a 41.09 per cent stake in Fleur Hotels from APG Strategic Real Estate Pool NV. The transaction also includes a proposed investment of INR 960 crore by Warburg Pincus, to be infused in tranches.
As part of the deal, Coastal Cedar Investments BV, an investment holding company fully owned and managed by Warburg Pincus, will acquire equity shares in Fleur Hotels. The regulator stated that the combination includes both the stake acquisition and a broader restructuring involving amalgamation and demerger within the Lemon Tree group.
The restructuring plan involves merging two wholly-owned subsidiaries, Carnation Hotels and Hamstede Living, into Lemon Tree Hotels. In parallel, four other subsidiaries Oriole Dr Fresh, Sukhsagar Complexes, Manakin Resorts, and Canary Hotels will be merged into Fleur Hotels. This will be done through the issuance of shares by Fleur to Lemon Tree.
Fleur Hotels, which currently owns and leases hotel assets directly and through its subsidiaries, will see a significant expansion of its portfolio following the transaction. Its operational scale is expected to grow from 3,993 keys across 24 hotels to 5,813 keys spanning 41 hotels.
Promoters of Lemon Tree Hotels include Ila Dubey, Lillette Dubey, Spank Management Services Pvt Ltd, and Sparrow Buildwell Pvt Ltd.
The company had earlier indicated that the restructuring and Warburg's investment are aimed at unlocking long-term shareholder value. The reorganisation will create two distinct platforms: Lemon Tree Hotels will operate as an asset-light hotel management and branding entity, while Fleur Hotels will focus on ownership, development, and scaling of hospitality assets.
This deal also marks a renewed association between Warburg Pincus and Lemon Tree Hotels. The private equity firm had previously invested in Lemon Tree in 2006, supporting its early-stage growth.
Following the restructuring, Fleur Hotels is expected to be listed on the NSE and BSE, subject to regulatory processes. Patanjali Govind Keswani, founder of Lemon Tree Hotels, is set to take on the role of Executive Chairman at Fleur Hotels and will later transition to a non-executive position at Lemon Tree.
The approval highlights the regulatory requirement for transactions beyond a certain threshold to be reviewed, ensuring fair competition and preventing anti-competitive practices in the market.
Source PTI
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