NEW DELHI: In a strategic move aimed at unlocking long-term shareholder value and capitalising on India’s hospitality boom, Lemon Tree Hotels Limited announced on Friday a comprehensive reorganization of its business and a significant investment from global private equity giant Warburg Pincus.
The Board of Directors of Lemon Tree Hotels has approved a Composite Scheme of Arrangement designed to split the group into two distinct, high-growth platforms. Concurrently, Warburg Pincus, through its affiliate Coastal Cedar Investments B.V., will acquire APG Strategic Real Estate Pool N.V.’s entire 41.09% stake in Fleur Hotels Limited, a subsidiary of Lemon Tree. Furthermore, Warburg Pincus has committed to infuse up to Rs 960 crore of primary capital into Fleur to fuel its expansion.
The restructuring plan, subject to regulatory and shareholder approvals, will result in transforming Lemon Tree Hotels Limited into a pure-play, asset-light hotel management, franchising, and digital brand platform, while evolving Fleur Hotels Limited from a subsidiary into a large-scale, growth-oriented hotel ownership and development platform, combining existing assets with a robust pipeline.
Under the scheme, hotel assets currently owned by Lemon Tree will be transferred to Fleur, which will become the group’s dedicated vehicle for owning and developing properties. Lemon Tree will then manage these assets under long-term agreements, focusing on growing its management and franchise network without the capital intensity of ownership.
A Renewed Partnership for Growth
This investment marks a reunion between Warburg Pincus and Lemon Tree, recalling the former’s pivotal investment in 2006 that helped build the hotel chain into a national brand. The transaction involves the execution of a Share Purchase Agreement for the stake sale and a Shareholders’ Agreement governing the fresh capital infusion.
Post-reorganization and investment, Lemon Tree will be holding 41.03% in Fleur. Public shareholding of Lemon Tree will be 32.96%, and Warburg Pincus (26.01%). Fleur is slated for a separate listing on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) within 12-15 months.
Patanjali Govind Keswani, Founder of Lemon Tree, will serve as the Executive Chairman of Fleur Hotels and will eventually transition to a Non-Executive role at Lemon Tree. Commenting on the development, Keswani said the scheme aims to create a “simplified, transparent, and growth-oriented structure” to enhance shareholder value. He emphasized leveraging Warburg Pincus’s global expertise to scale responsibly and embed sustainability into the group’s growth journey.
Anish Saraf, Managing Director at Warburg Pincus, praised Lemon Tree’s pioneering role in India’s mid-market hospitality sector and expressed confidence in supporting the platform’s next chapter of growth amid favorable industry fundamentals.
Scale and market context
Post-transaction, Fleur will become one of India’s largest hotel asset owners, with its portfolio expanding to 5,813 keys across 41 hotels from the current 3,993 keys across 24 hotels.
Lemon Tree, meanwhile, will continue to manage an extensive portfolio, including the Fleur-owned hotels and its existing third-party managed properties, totalling over 6,000 operational keys and a pipeline of more than 9,400 keys across 127 hotels in various development stages globally.
The Scheme’s appointed date is set for April 1, 2026. It involves the merger of certain Lemon Tree subsidiaries and the demerger of 12 hotels (11 operational and one under construction) along with development capabilities into Fleur. Morgan Stanley acted as the exclusive financial advisor for the transaction.
APG, the exiting investor, highlighted the transaction as the culmination of its successful long-term investment in one of India’s leading hospitality platforms.