Leela Palaces, Hotels & Resorts, the luxury hotel chain backed by Brookfield Asset Management, is gearing up for a groundbreaking initial public offering (IPO) that aims to raise ₹5,000 crore. This move will position the IPO as the largest ever in India’s hotel sector, signalling a robust resurgence in the hospitality industry.
Major Offering in the Hospitality Sector
Sources reveal that the upcoming IPO will comprise a ₹3,000 crore fresh issue, which will be allocated for growth and expansion initiatives. Additionally, a ₹2,000 crore offer-for-sale will allow Brookfield to dilute its stake. The draft papers are set to be filed with the Securities and Exchange Board of India (SEBI) soon, marking a significant milestone for the company and the sector.
A Syndicate of Investment Banks
To facilitate this monumental IPO, a consortium of 11 investment banks will manage the share sale, including prominent firms like Kotak Mahindra Capital, Morgan Stanley, and JP Morgan. Their involvement underscores the confidence in Leela’s potential and the overall optimism surrounding the hospitality market.
The Leela Palaces Journey
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In March 2019, Brookfield Asset Management acquired four key properties from JM Financial Asset Reconstruction Co. for ₹3,950 crore. These properties, located in major cities such as Delhi, Bengaluru, Udaipur, and Chennai, have undergone significant enhancements under Brookfield’s ownership. Importantly, the IPO will not include the Leela Mumbai property, which is already publicly traded as Hotel LeelaVenture Ltd (HLV).
Strategic Use of IPO Proceeds
The funds raised through the IPO will primarily be utilized for debt repayment and strategic growth initiatives. Leela Palaces plans to expand its luxury offerings by adding eight new hotels to its portfolio by 2028, enhancing its stature as a top choice for discerning travelers.
Capitalizing on a Resurgent Hospitality Sector
Leela’s IPO comes at a fortuitous time for the hospitality industry, which has seen a robust recovery in travel demand, especially in corporate sectors. Recent successful IPOs from hotel firms like Samhi Hotels and Juniper Hotels have boosted investor confidence, making this an opportune moment for Leela to tap into the public market.
Financial Performance Indicators
Leela Palaces has exhibited promising financial performance, with revenue per available room (RevPAR) increasing by nearly 23% year-on-year to ₹9,592 in the fiscal year ending March 2024. Furthermore, the company has significantly narrowed its consolidated annual losses, reflecting effective management and recovery strategies.
Public Opinion: Share Your Thoughts
As Leela Palaces prepares for this historic IPO, we want to hear from you! Do you think this IPO will be a profitable venture for investors? Share your insights in the comments below and join the conversation surrounding this exciting development in India’s hospitality industry.
