NEW DELHI: Schloss Bangalore Ltd, which operates Leela Palaces Hotels & Resorts, on Sunday filed preliminary papers with capital markets regulator Sebi to raise Rs 5,000 crore through an initial public offering (IPO). This could be the country’s largest IPO in the hospitality sector.
The company’s proposed IPO is a combination of a fresh issue of equity shares worth Rs 3,000 crore and an offer for sale (OFS) of stocks valued Rs 2,000 crore by promoter Project Ballet Bangalore Holdings (DIFC) Pvt Ltd, according to the draft red herring prospectus (DRHP).
Schloss Bangalore, which is backed by Brookfield Asset Management, said proceeds of the fresh issue will be used for loan availed by the company and its subsidiaries and for general corporate purposes.
As of March 2024, the company had a total borrowings of Rs 4,052.50 crore, the draft papers showed.
The hospitality chain company may consider raising Rs 600 crore in a pre-IPO placement round. If such placement is carried out, the fresh issue size will be reduced.
Schloss Bangalore, known for its luxurious hotels and resorts under “The Leela” brand, had a portfolio of 3,382 keys across 12 operational hotels.
As of May 31, 2024, its portfolio includes The Leela Palaces, The Leela Hotels, and The Leela Resorts, located across 10 destinations in the country.
On the financial front, the company has seen significant financial growth, with operating profit or EBITDA increasing from Rs 87.72 crore in FY22 to Rs 600.03 crore in FY24.
The draft papers filing comes at a time when country’s IPO market is thriving, with around 60 main board companies having launched their initial share-sales this year so far.
According to HVS report, India’s hospitality sector is set for strong growth as the country’s GDP is expected to nearly double to USD 7.1 trillion by 2030 from USD 3.6 trillion in 2023.
The luxury hotel segment, which makes up just 17 per cent of the branded hotel market, is underdeveloped. Further, demand for luxury rooms is projected to grow at a rate of 10.6 per cent annually from FY24 to FY28, while supply will increase only 5.9 per cent, the report noted.
Moreover, domestic tourism and foreign tourist arrivals are also expected to rise, with annual growth rates of 13.4 per cent and 7.1 per cent, respectively, from 2024 to 2030, it added.
The IPO is being managed by a consortium of 11 merchant bankers — JM Financial, BofA Securities India, Morgan Stanley India Company, JP Morgan India, Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, IIFL Securities, ICICI Securities, Motilal Oswal Investment Advisors, and SBI Capital Markets.
Earlier this month, Pune-based Ventive Hospitality, a joint venture between Blackstone Group and Panchshil Realty, filed preliminary papers with Sebi to raise Rs 2,000 crore through an IPO.
Ventive Hospitality is a hospitality asset owner primarily focused on luxury offerings across business and leisure segments in India and the Maldives.
