This story first appeared in DNA Money edition on Tuesday, September 11, 2012.
It was in January 2009 that ITC last picked up a stake in EIH – which was 0.5%.
Since then, the PRS Oberoi-promoted hotels chain has had a few looking-over-the-shoulder moments. Was ITC chairman Yogesh Chander Deveshwar the proverbial predator at the gate?
The build-up of anxiety was enough for hospitality’s doyen to bring in a white knight – the Mukesh Ambani-led Reliance Industries, in August 2010.
The company now holds 18.53% stake, and Mukesh’s wife Nita and confidante Manoj Modi are members of the EIH board.
Yet that hasn’t stopped Deveshwar and ITC, through its investment arm Russel Credit, from increasing its stake by 1% or 57.38 lakh shares on Monday, to 15.98%.
The Rs41.89 crore purchase was made through HSBC Bank (Mauritius) Ltd in a bulk deal on Monday wherein Russel Credit paid Rs73 per share.
EIH shares closed at Rs79.35 after reaching an intra-day high of Rs81.45.
In the January-March quarter of 2009, ITC’s holding in EIH increased from 14.96% (from April-June 2008) to 14.98%.
ITC’s stake then was a whisker under the open offer trigger of 15% set by the Securities and Exchange Board of India (Sebi) until August 2011 post which threshold was increased to 25%.
Deveshwar’s renewed interest in the hospitality business is evident from the fact that Russel Credit has been accumulating shares in Hotel Leelaventure Ltd during the April - June quarter of 2012, increasing ITC’s holding by 1.1% to 13.98% as of August 2012.
Industry experts ruled out ITC’s increased shareholding in EIH Ltd as an attempt to gradually pursue hostile takeover considering RIL is already on board as a white knight. “ITC can never take on RIL’s financial muscle. It’s just not possible. Can’t say the same about Hotel Leelaventure though considering Capt. Nair is reeling under the financial pressure with mounting debt on the company’s books,” said a leading hospitality consultant requesting not to be identified.
ITC spokesperson did not comment on the development. The management has however, maintained in the past that buying into hotel company stocks is part of its treasury operations and has nothing to do with hostile takeover.
Commenting on ITC’s hotel stock buying spree, Homi S Aibara, partner, Mahajan & Aibara Management Consultants (a hospitality, travel and tourism industry focused consultancy firm), said, “Majority of the hotel sector stocks are hugely undervalued currently and are nowhere close to the company’s underlying value of assets owned by them. I would have bought hotel stocks too, if I had such a huge treasury operation.”
Earlier in March 2012, Mukesh Ambani-led Reliance Industries had bought out Max Group chairman Analjit Singh’s 3.73% stake in EIH Ltd. Singh’s investment firms Gaylord Impex and Pivet Finances had sold all the 21,315,000 EIH shares in a bulk deal to RIL subsidiary Reliance Industries Investment and Holding Pvt Ltd at Rs90 a piece valuing the deal to Rs191.83 crore. RIL current holding has now increased to 18.53% from 14.8% before.
It was in January 2009 that ITC last picked up a stake in EIH – which was 0.5%.
Since then, the PRS Oberoi-promoted hotels chain has had a few looking-over-the-shoulder moments. Was ITC chairman Yogesh Chander Deveshwar the proverbial predator at the gate?
The build-up of anxiety was enough for hospitality’s doyen to bring in a white knight – the Mukesh Ambani-led Reliance Industries, in August 2010.
The company now holds 18.53% stake, and Mukesh’s wife Nita and confidante Manoj Modi are members of the EIH board.
Yet that hasn’t stopped Deveshwar and ITC, through its investment arm Russel Credit, from increasing its stake by 1% or 57.38 lakh shares on Monday, to 15.98%.
The Rs41.89 crore purchase was made through HSBC Bank (Mauritius) Ltd in a bulk deal on Monday wherein Russel Credit paid Rs73 per share.
EIH shares closed at Rs79.35 after reaching an intra-day high of Rs81.45.
In the January-March quarter of 2009, ITC’s holding in EIH increased from 14.96% (from April-June 2008) to 14.98%.
ITC’s stake then was a whisker under the open offer trigger of 15% set by the Securities and Exchange Board of India (Sebi) until August 2011 post which threshold was increased to 25%.
Deveshwar’s renewed interest in the hospitality business is evident from the fact that Russel Credit has been accumulating shares in Hotel Leelaventure Ltd during the April - June quarter of 2012, increasing ITC’s holding by 1.1% to 13.98% as of August 2012.
Industry experts ruled out ITC’s increased shareholding in EIH Ltd as an attempt to gradually pursue hostile takeover considering RIL is already on board as a white knight. “ITC can never take on RIL’s financial muscle. It’s just not possible. Can’t say the same about Hotel Leelaventure though considering Capt. Nair is reeling under the financial pressure with mounting debt on the company’s books,” said a leading hospitality consultant requesting not to be identified.
ITC spokesperson did not comment on the development. The management has however, maintained in the past that buying into hotel company stocks is part of its treasury operations and has nothing to do with hostile takeover.
Commenting on ITC’s hotel stock buying spree, Homi S Aibara, partner, Mahajan & Aibara Management Consultants (a hospitality, travel and tourism industry focused consultancy firm), said, “Majority of the hotel sector stocks are hugely undervalued currently and are nowhere close to the company’s underlying value of assets owned by them. I would have bought hotel stocks too, if I had such a huge treasury operation.”
Earlier in March 2012, Mukesh Ambani-led Reliance Industries had bought out Max Group chairman Analjit Singh’s 3.73% stake in EIH Ltd. Singh’s investment firms Gaylord Impex and Pivet Finances had sold all the 21,315,000 EIH shares in a bulk deal to RIL subsidiary Reliance Industries Investment and Holding Pvt Ltd at Rs90 a piece valuing the deal to Rs191.83 crore. RIL current holding has now increased to 18.53% from 14.8% before.
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