Hotel Leelaventure Ltd is looking to sell its properties in Delhi and Chennai to sovereign wealth funds of Abu Dhabi and Qatar for about Rs. 1,900 crore, a move that would help the group bring down its debt.
Reacting to an agency report that spoke of outright sale, Vivek Nair, chairman and MD, Hotel Leelaventure Ltd said in effect the company was getting funds for investment. “That is an inaccurate report as we are divesting in some of our hotels in order to set up JVs with SWFs in which we will retain substantial equity.”
“We would continue to market and operate all hotels in the group through management agreements. The amount thus received from the disinvestments will be used to pare down the project debt and to co-invest with owners in new projects to be set up following our Asset Light Policy if required,” he added.
The hospitality group has a debt of Rs. 4,750 crore while its revenue stood at Rs. 571 crore in 2013-14. The group remained debt-free till 2004-05.
The group could look at further selling off its non-core assets to address the debt issue, sources said.
“Not just that it is also likely to slow down expansion process,” a source who is familiar with the development said.
The group is likely to hive-off the two properties into separate entities to facilitate the deal and foreign investors are likely to pick up about 74% stake in the hived-off entities while Leelaventure will hold the remaining stake. It would also continue to manage the five-star hotels for a fixed fee.
Leelaventure, part of The Leela Group, is looking to divest stakes in its bouquet including luxury hotels, resort properties, business and IT parks.
It sold its luxury hotel on Kovalam beach to industrialist Ravi Pillai for Rs. 500 crore in 2011. Later in 2012, it sold the Chennai IT park building for Rs. 170 crore to Reliance Industries Ltd.