If faced with the prospect of a hostile takeover, luxury hotel chain Leela Group will likely seek out Reliance Industries chairman Mukesh Ambani to retain control, group chairman CP Krishnan Nair said on Monday as he unveiled a new hotel in central Delhi with expansion plans in mind.
Asked by a reporter in the backdrop of a significant stake held by conglomerate ITC in Hotel Leelaventure Ltd, Nair responded to the hypothetical query with a clear option.
“If at all, there is a threat from ITC, Mukesh is available...If at any point of time I want (a partner), Mukesh will be my ideal partner,” Nair said during the launch of Leela’s first property in New Delhi. The hotel is just off Chanakyapuri, the capital’s diplomatic enclave.
An ITC spokesperson declined to comment on the speculation, triggered by its stake in the hotels firm. ITC currently holds 12.9% in Leela, only 2.1 percentage points less than the 15% that would trigger the mandatory open offer to minority shareholders under stock market regulations.
A Leela Group spokesperson later clarified that Nair’s comment was “a casual remark based on the relationship he has enjoyed with the Ambani family for over four decades and therefore, should not be construed as any definitive measure being planned or undertaken by the management.”
Ambani’s possible role may be linked to his help last year to the promoters of EIH (the former East India Hotels) that owns and operates the Oberoi chain.
The Oberoi family-led promoters had divested 14.6% in favour of Mukesh Ambani-owned Reliance Industries Investment and Holding Private Ltd for more than Rs1,000 crore. Reliance later acquired 0.3% more in EIH Ltd from the market.
The move was widely seen as an attempt by the promoters of EIH to rope in Mukesh Ambani as a “white knight” to ward off a possible open offer by ITC that holds 14.98 % stakes.
The Leela Group said it plans to raise around R1,950 crore through sale of equity assets and bonds and is also expected to conclude a preferential allotment of equity shares over the next eight weeks to private equity investors to raise another Rs600 crore.
Nair said this would bring down promoter equity to 50.5% from 55% and the promoters would try boost stakes through market purchases.