IPO-bound Schloss to expand ‘Leela' portfolio, enter new segments
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Brookfield-backed Schloss Bangalore Ltd, which will launch India's largest hospitality initial public offering (IPO) next week, plans to open seven new 'Leela' branded luxury hotels in spiritual, hill stations, wildlife, heritage and grandeur, and business categories in the next three years.The new hotels will be built in Ayodhya, Ranthambore, Gangtok, Srinagar, Bandhavgarh, Agra, and Mumbai, as Schloss plans to expand its portfolio to 20 from 13 hotels, catering to the luxury traveller, said top company officials.
Schloss, which operates 'The Leela' brand of hotels across cities, will launch its IPO on 26 May to raise ₹3,500 crore, including a fresh issue of ₹2,500 crore and an offer of sale (OFS) worth ₹1,000 crore. The three-day IPO will close on 28 May.
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Schloss' original plan was to raise ₹5,000 crore through an IPO when it had filed the draft papers with the market regulator last year.
Brookfield support
'Business has been fantastic in the last six months, and a lot of internal cash has been generated, reducing the need for a larger issue. The current net debt is around ₹2,500 crore, which will reduce to zero after the IPO," Ankur Gupta, managing partner, head of real estate for Asia Pacific & Middle East, Brookfield, said in an interview with Mint. In 2019, Hotel Leelaventure Ltd completed the sale of its hotel properties to Canada's Brookfield Asset Management for ₹3,950 crore. C.P. Krishnan Nair set up the hotel chain in 1986.
The upcoming Leela IPO will be Brookfield's second public listing of a company in India. The first was in 2021, when Brookfield India Real Estate Trust (Brookfield India REIT), which comprises Grade-A office assets, was launched through an IPO. Grade A office assets means assets in superior locations, good quality and amenities, among other things.The Leela business has been scaled up by Brookfield and aims to grow further going forward.
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Schloss has 13 hotels with 3,353 keys, and the seven new hotel projects will add another 678 keys. Five of the seven new hotels will be owned, and the remaining two will be managed or franchised. 'Our focus is on luxury, which is where demand is being generated. In comparison, the supply of luxury hotels is limited. We are also launching an exclusive, members-only, by invitation club in various locations including Delhi, Bengaluru and Chennai," said Anuraag Bhatnagar, CEO, The Leela.
More hotel IPOs
Even though analysts and bankers now perceive the primary market as less vibrant than last calendar year, the scenario for hotels and hospitality companies is somewhat different, especially with rising average individual income and a palpable desire among the country's urban youth to spend on luxury work stays and family vacations.
According to the India Hotel Market Review 2024, released by hotel consultancy Horwath HTL in February, the organized hotel industry is set to add more than 100,000 rooms to surpass the 300,000-mark by 2029. For the first time, hotel chains crossed the 200,000 branded room mark, adding 14,000 rooms to India's inventory in 2024.
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Recently, Prestige Hospitality Ventures Ltd filed draft papers for a ₹2,700 crore IPO. It follows a slew of hospitality IPOs in recent months, including Samhi Hotels (in September 2023), Juniper Hotels (February 2024), Park Hotels (February 2024) and, most recently, the December listing of Ventive Hospitality Ltd, a joint venture between real estate developer Panchshil Realty and global asset manager Blackstone.Brigade Hotel Ventures Ltd has also received the approval for a ₹900 crore IPO.
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