Hotel Leelaventure Ltd, which owns and operates luxury hotels under the brand Leela, is in talks with investors to divest stake in some of its hotel properties to reduce its debt, the company disclosed in the stock exchanges on Friday.
It was responding to a report by The Times of India which said that Leela is in talks with sovereign wealth funds of Abu Dhabi, Qatar and Malaysia to sell 74 per cent stake in its Delhi and Chennai hotels for over Rs 2,000 crore.
Vivek Nair, CMD of Hotel Leelaventure, confirmed the development in the report saying that it is being done to lower the debt level of the company from current Rs 4,000 crore.
The group, founded by Krishnan Nair in 1986, has been reeling under heavy debt. Leela has been looking to raise Rs 3,000 crore by selling non-core assets.
Following this strategy, the group sold its Chennai Business Park to Reliance Industries for Rs 170 crore last year. In 2011, Leela sold its Kovalam property for Rs 500 crore to Travancore Enterprises, owned by B Ravindran Pillai. The group has been pursuing an asset light strategy where it is selling its hotels but keeping the management rights.
Amidst regulatory hurdles and oversupply in certain regions, hotel industry is going through a difficult time and is seeing a lot of M&A activity. The deals in this space include Samhi Hotels acquiring Royal Orchid’s Hyderabad property for Rs 180 crore and Thomas Cook acquiring 74.9 per cent stake in Sterling Holiday Resorts.
(Edited by Joby Puthuparampil Johnson)