Lemon Tree Hotels Shares in Focus On Monday; Warburg Pincus To Invest Rs 960 Cr In Subsidiary Fleur Hotels

Lemon Tree Hotels Share Price: Shares of Lemon Tree Hotels Limited will remain in focus on Monday, January 12, after the company announced that its board of directors approved a major acquisition. American investment firm, Warburg Pincus, is set to invest around Rs 960 crore in Fleur Hotels, a current subsidiary of Lemon Tree.

Lemon Tree Hotels shares closed 0.73% lower at Rs 149.7 per share on BSE on Friday, January 10, with a market capitalisation of Rs 7,418.78 crore. The stock had touched an intraday high of Rs 152.50 per share and an intraday low of Rs 148.50 per share.

Warburg Pincus To Acquire 41% Stake

The boards of directors of Lemon Tree Hotels and Fleur Hotels Limited, on Saturday, approved the restructuring of the organisation. The proposed restructuring will create two differentiated and complementary platforms, ie Lemon Tree Hotels Limited and Fleur Hotels Limited, which is a current subsidiary of Lemon Tree.

As per the share purchase agreement, approved on Saturday, Warburg Pincus' affiliate Coastal Cedar Investment BV will acquire the full 41.09% equity stake held by APG Strategic Real Estate Pool N.V. ("APG") in Fleur. To execute the agreement, Warburg will invest Rs 960 crore in tranches.

About Lemon Tree, Warburg Pincus, Fleur Transaction

The company's filing stated: "The Board has also approved the execution of the Share Purchase Agreement by and amongst the Company, APG Strategic Real Estate Pool NV, Coastal Cedar Investments BV, an affiliate of Warburg Pincus, and Fleur Hotels Limited, for the sale of APG's entire shareholding of 41.09% in the Fleur to the Investor," the filing read.

Under the proposed scheme, Lemon Tree Hotels will focus on managing and branding hotels through an asset-light model, while Fleur Hotels will own and develop properties at scale. Fleur is planned as the group's hotel ownership platform, with development capabilities and a strong pipeline, and its equity shares are proposed for listing on NSE and BSE.

The plan involves several internal mergers. Lemon Tree Hotels will combine its wholly owned units Carnation Hotels and Hamstede Living with the parent. Four other wholly owned subsidiaries - Oriole Dr Fresh, Sukhsagar Complexes, Manakin Resorts, and Canary Hotels - will be merged into Fleur Hotels, with shares in Fleur issued to Lemon Tree as consideration.

Once the deal is completed, Fleur Hotels is expected to rank among India's larger hotel asset owners. According to Lemon Tree Hotels, Fleur's owned portfolio will rise from 3,993 keys across 24 operating hotels to 5,813 keys across 41 hotels. Lemon Tree will continue managing these hotels for Fleur under its asset-light strategy.