Warburg Pincus to invest ₹960 crore in Lemon Tree’s Fleur Hotels

Lemon Tree Hotels announced on Saturday, January 10, that its board of directors acquired APG Strategic Real Estate Pool NV’s 41.09% stake in Warburg Pincus subsidiary Fleur Hotels, as well as ₹960 crore in phases.

“The Board also approved the signing of the Share Purchase Agreement between the Company, APG Strategic Real Estate Pool NV, Warburg Pincus subsidiary Coastal Cedar Investments BV and Fleur Hotels Limited for the sale of APG’s entire 41.09% stake in Fleur to the Investor,” the application said.

The Board approved an agreement for Warburg Pincus to make a primary investment of up to TL 100,000. ₹960 crore in phases to fund the company’s future growth of Fleur, which will be listed separately on the stock exchanges.

Details of the plan

The proposed restructuring is Lemon Tree Hotels Limited, focusing solely on hotel management and branding with an asset-light model; and Fleur Hotels Limited, which will aim to be a large-scale, growth-oriented hotel ownership platform with development expertise and a strong pipeline.

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The program is subject to regulatory and shareholder approvals.

“The plan, to be implemented through an NCLT-approved process, will reorganize the group’s asset ownership and operating structure. Hotel assets currently owned by Lemon Tree will be transferred to Fleur, which will serve as the group’s exclusive asset ownership and development company,” Lemon Tree said. he said.

He added that Fleur will oversee all future hotel acquisitions and developments for the group, while Lemon Tree will move to a fully asset-light model, focusing on expanding its hotel management, franchising and digital businesses.

As per the offer, Fleur’s shares will be listed on NSE and BSE. Patanjali Govind Keswani, Founder of Lemon Tree Hotels, will serve as Chief Executive Officer of Fleur Hotels and eventually transition into a Non-Executive role at Lemon Tree.

“The aim of this program is to create a simplified, transparent and growth-oriented structure for both companies, which we believe will increase long-term value for our shareholders,” Keswani said. he said.

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Anish Saraf, Managing Director, Warburg Pincus, said: “Lemon Tree has played a leading role in shaping India’s midscale hospitality segment by building a large-scale, high-quality portfolio with strong brands and operating capabilities. With positive industry fundamentals and a clear strategic roadmap, we look forward to supporting the team as we continue to scale the business.”

Under the plan, Lemon Tree will merge its two wholly owned subsidiaries, Carnation Hotels and Hamstede Living, with itself. Additionally, four other wholly owned subsidiaries (Oriole Dr Fresh, Sukhsagar Complexes, Manakin Resorts and Canary Hotels) will be merged with Fleur in exchange for shares issued to Lemon Tree.

In addition, Lemon Tree’s 12 hotels (11 operational hotels and one hotel under construction in Shimla) along with an investment in a hotel under construction in Shillong through Lemon Tree’s 100% subsidiary will also be spun off with Fleur.

The entire listing process for Fleur is expected to be completed within 12 to 15 months.

Following the proposed transaction, Fleur will become one of the largest owners of hospitality assets in India. Lemon Tree said its portfolio will grow significantly, from 3,993 keys and 24 operating hotels to 5,813 keys across 41 hotels.

Lemon Tree will continue to operate its rental hotels in Indore and Aurangabad, which are nearing the end of their lease terms. In addition, Lemon Tree will manage its existing portfolio of 3,993 keys in 24 hotels operated by Lemon Tree through Fleur, as well as 1,820 keys in 17 hotels transferred to Fleur.