Morgan Stanley to take 20% in IHHR
FINANCIAL services major Morgan Stanley is close to picking up 15-20% stake in IHHR Hospitality, owners of Ananda and Ista brands of Spa and hotels, for $35-40 million. Sources in investment banking circles told ET that Morgan Stanley will have a position on the board of the hospitality company, which is currently in the process of expanding its footprint in Delhi, Hyderabad, Pune and Ahmedabad with plans to have nine properties under the Ista brand over the next three years. The company first set up its flagship property Ananda in the Himalayas in 1998. The second spa resort, Shanti Ananda Maurice, was opened in Mauritius late last year. IHHR forayed into the business hotel segment in April 2006 by opening Ista Bangalore. When contacted by ET, IHHR Hospitality managing director Ashok Khanna confirmed that talks for raising funds were currently on. He however, refused to give any details of the deal. Investment bankers said the UK-based NRI businessman Sudhir Choudhrie holds over 70% stake in IHHR Hospitality while the rest is held by a clutch of individual investors. In the recent past, there have been a spate of private equity deals in the Indian hospitality sector. Last year, Warburg Pincus picked up 27% stake in Delhi-based Lemon Tree Hotels for Rs 280 crore while the Dubai-based investment company Isthithmar floated a Rs 450-crore JV with Europe’s EasyGroup for setting up a chain of budget hotels in the country. ICICI Venture Funds has taken a stake in Hyderabad’s Viceroy Hotels for Rs 100 crore. Several international PE funds including Blackstone, ChrysCapital and Trikona are evaluating deals for investing in the hospitality sector. British real estate major Dawnay Day is foraying into the sector by investing $1.2 billion over the next five years while India Hospitality Corp, a special purpose acquisition corporation, raised $100 million at the Alternate Investment Market in London recently to invest in the hospitality and leisure sectors in India. With the Commonwealth Games 2010 just three years away, there’s a flurry of activity in the hospitality space in the NCR which is short of 30,000 room. Industry estimates suggest that about 27 new hotels and service apartment projects are slated to come up over the next four years in the NCR adding over 5,000 rooms.
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