This story first appeared in DNA Money edition on Thursday March 17, 2011.
Roots Corporation Ltd (RCL), a subsidiary of Indian Hotels Co Ltd (IHCL) that runs the Ginger brand of hotels, is selling a minority stake to Singapore-based private equity firm Omega TC Holdings Pte Ltd for Rs150 crore.
According to the IHCL management, Omega will acquire stake in RCL by making investments in various tranches. “Omega will also acquire compulsorily convertible preference shares from some existing holders for an aggregate consideration of Rs70 crore. This apart, Omega will have an option to invest a further Rs100 crore in RCL by March 2014, subject to satisfaction of certain conditions,” IHCL told the Bombay Stock Exchange.
RCL, however, did not disclose the purpose behind the fundraising and its deployment plan. Prabhat Pani, CEO of RCL, was unavailable for comment.
Industry experts, however, said that fundraising was pretty much on cards and it would have happened much earlier but the plans had to be deferred due to economic meltdown post 2008.
“Fundraising was scheduled by the IHCL management after achieving the critical mass of 20-25 Ginger hotels. In fact, the deal has come at a time when Roots has 24 hotels with around 2,400 guestrooms across the country,” said a source.
Interestingly, IHCL has shared no information about Omega TC Holdings in terms of its overall corpus and other investee companies.
The PE placement could also pave the way for RCL’s initial public offering which is likely to happen in the next couple of years. During the IHCL annual general meeting in August 2010, Ratan Tata, chairman, Tata Group, had responded to a shareholder query saying, “The Ginger hotel chain would be listed in the next couple of years depending on a series of circumstances.”
While a significant proportion of the Ginger portfolio is owned, there are a few other projects such as Ginger Rail Yatri Niwas (operated under PPP arrangement) and two management contracts in Manesar and Agartala.
The Ginger pipeline currently comprises 10 hotels under various stages of development including the brand’s Mumbai debut at Airoli in Navi Mumbai. These hotels are likely to add 1,000 guestrooms.
Roots Corporation Ltd (RCL), a subsidiary of Indian Hotels Co Ltd (IHCL) that runs the Ginger brand of hotels, is selling a minority stake to Singapore-based private equity firm Omega TC Holdings Pte Ltd for Rs150 crore.
According to the IHCL management, Omega will acquire stake in RCL by making investments in various tranches. “Omega will also acquire compulsorily convertible preference shares from some existing holders for an aggregate consideration of Rs70 crore. This apart, Omega will have an option to invest a further Rs100 crore in RCL by March 2014, subject to satisfaction of certain conditions,” IHCL told the Bombay Stock Exchange.
RCL, however, did not disclose the purpose behind the fundraising and its deployment plan. Prabhat Pani, CEO of RCL, was unavailable for comment.
Industry experts, however, said that fundraising was pretty much on cards and it would have happened much earlier but the plans had to be deferred due to economic meltdown post 2008.
“Fundraising was scheduled by the IHCL management after achieving the critical mass of 20-25 Ginger hotels. In fact, the deal has come at a time when Roots has 24 hotels with around 2,400 guestrooms across the country,” said a source.
Interestingly, IHCL has shared no information about Omega TC Holdings in terms of its overall corpus and other investee companies.
The PE placement could also pave the way for RCL’s initial public offering which is likely to happen in the next couple of years. During the IHCL annual general meeting in August 2010, Ratan Tata, chairman, Tata Group, had responded to a shareholder query saying, “The Ginger hotel chain would be listed in the next couple of years depending on a series of circumstances.”
While a significant proportion of the Ginger portfolio is owned, there are a few other projects such as Ginger Rail Yatri Niwas (operated under PPP arrangement) and two management contracts in Manesar and Agartala.
The Ginger pipeline currently comprises 10 hotels under various stages of development including the brand’s Mumbai debut at Airoli in Navi Mumbai. These hotels are likely to add 1,000 guestrooms.
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