Indian Hotels Company Ltd is set to receive a significant boost to its presence in the luxury hotels market post its Rs 4,000 crore deal with Singapore sovereign wealth fund GIC. On Friday, both firms announced that they have signed an investment framework for about Rs 4,000 crore to acquire hotels in India.“The capital platform will be used to acquire fully operational hotels mainly in the luxury, upper upscale and upscale segments in India,” Indian Hotels said.
This is set to come as a huge boost to the luxury hotel operator, since the large majority of the investment is to come from GIC. According to the two firms, GIC will contribute 70 per cent of money to the investment platform while Indian Hotels will chip in the remaining amount over a period of three years.
The deal plays well with Indian Hotels’ plans to improve inventory growth as part of its Aspiration 2022 plan, which sources say involves divestment of non-core assets like residential apartments and land banks, turning the hotels major into a less ownership-driven company. It is also looking to diversify from its luxury segment focus to fast growing budget categories.
A major part of this plan is that the hotel firm is looking to add on asset light properties within the Indian market. Analysts say IHCL will manage the hotels acquired under the Special Purpose Vehicle, which is expected to give a fillip to the Taj brand.
As part of the deal, acquisitions are to be made in fully operational luxury, upper upscale and upscale hotels and the expansion is expected to be funded through a 50:50 mix of debt and equity. “As a long-term investor, we are confident in the outlook of India’s hospitality sector. We look forward to working closely with established partners such as IHCL to pursue attractive opportunities,” said Kok Sun Lee, CIO, GIC Real Estate