SAMHI Hotels ltd gets SEBI nod to float IPO

SAMHI Hotels Ltd., which owns the largest number of Marriot, IHG, and Hyatt hotels in India, received a regulatory nod to float an initial public offering. SEBI issued a final observation of the IPO proposal on November 29, 2019. This makes SAMHI Hotels the 26th company to receive a regulatory clearance this year for an IPO. SEBI had cleared 72 IPO proposals last year and 46 in 2017.
 
SAMHI intends to raise around Rs. 1,100 crores in fresh capital through the IPO. The offering also includes a secondary sale by existing investors, namely, Equity International, IFC, GTI Capital, and Goldman Sachs. The company may also consider raising Rs. 400 crores by issuing fresh shares in a pre-IPO round or a rights issue to existing shareholders via a private placement. The overall IPO size is estimated to be around Rs. 2,000 crores.Equity International is the largest shareholder in the company with a 49.35 per cent stake. It will sell roughly one-fourth of its stake in the proposed IPO. Goldman Sachs and GTI Capital will trim about 20 per cent of their respective stake. IFC may sell a little under one-fifth, while SAMHI co-founder and chairman, Ashish Jakhanwala, and non-executive director, Manav Thadani, will sell a small chunk of their respective holdings. The IPO may value the hotel company around Rs. 5,000-5,500 crores.
 
SAMHI joins Lemon Tree Hotels, Bharat Hotels, and K Raheja-promoted Chalet Hotels in taking the IPO route. Lemon Tree was the first among the recent hotel chains to go public in March 2018, followed by Chalet Hotels in January this year. Lemon Tree has a market capitalisation of around Rs. 4,836.66 crores while Chalet commands a market capitalisation of Rs. 7,080.50 crores. Other listed peers include Indian Hotels Co. Ltd., the Tata Group subsidiary, and the operator of the Taj group of hotels, with a market cap of Rs. 17,684.27 crores and EIH Ltd., with a market cap of Rs. 8,962.21 crores.
 
Kotak Mahindra Capital Co. CLSA India, DSP Merrill Lynch, and Goldman Sachs (India) Securities are merchant bankers, arranging SAMHI’s share sale.
 
SAMHI will use the part of the fresh proceeds to repay debt, pay accrued interest on the convertible debentures allotted to IFC and for general corporate purposes, which include growth opportunities.