Schloss Bangalore Ltd plans to raise INR 5,000 crore through an initial public offering (IPO), which would be the largest in India's hospitality sector to date. The IPO will include a fresh issue of equity shares worth INR 3,000 crore and an offer for sale (OFS) of INR 2,000 crore by its promoter, Project Ballet Bangalore Holdings (DIFC) Pvt Ltd. Backed by Brookfield Asset Management, the company has filed the necessary documents with SEBI. Funds raised will be used to pay off loans and support general corporate purposes, reflecting strong growth in the hospitality market.
Schloss Bangalore Ltd, which operates Leela Palaces Hotels & Resorts and manages luxury hotels and resorts under the brand "The Leela" and manages luxury hotels and resorts, is planning to raise INR 5,000 crore through an initial public offering (IPO). This would be the largest IPO in India's hospitality sector to date. The company, backed by Brookfield Asset Management, manages 12 hotels with a total of 3,382 rooms across 10 Indian cities. Schloss Bangalore has filed the necessary documents with the capital markets regulator, SEBI.
According to the draft red herring prospectus (DRHP), the IPO consists of two parts, a fresh issue of equity shares worth INR 3,000 crore and an offer for sale (OFS) of shares valued at INR 2,000 crore by its promoter, Project Ballet Bangalore Holdings (DIFC) Pvt Ltd. The company may also raise INR 600 crore through a pre-IPO placement round, which would reduce the size of the fresh issue if completed. The funds raised from the fresh issue will be used to pay off loans and for general corporate purposes. As of March 2024, the company's total borrowings stood at INR 4,052.50 crore. Schloss Bangalore has experienced significant financial growth, with its operating profit (EBITDA) increasing from INR 87.72 crore in FY22 to INR 600.03 crore in FY24.
The Indian IPO market is currently booming, with around 60 companies launching IPOs this year. According to a report by HVS, India's hospitality sector is set for strong growth, with the country's GDP expected to nearly double to USD 7.1 trillion by 2030. The luxury hotel segment, which represents only 17% of the branded hotel market, is currently underdeveloped. Demand for luxury hotel rooms is projected to grow at an annual rate of 10.6% between FY24 and FY28, while supply is expected to increase by only 5.9%. Domestic tourism and foreign tourist arrivals are also forecasted to grow at rates of 13.4% and 7.1% per year, respectively, from 2024 to 2030.
Earlier this month, Pune-based Ventive Hospitality, a joint venture between Blackstone Group and Panchshil Realty, also filed documents for an IPO worth INR 2,000 crore. Ventive focuses on luxury properties across India and the Maldives. The IPO is being managed by a group of 11 merchant bankers, including JM Financial, BofA Securities India, Morgan Stanley India, JP Morgan India, Kotak Mahindra Capital, Axis Capital, Citigroup Global Markets India, IIFL Securities, ICICI Securities, Motilal Oswal Investment Advisors, and SBI Capital Markets.
In conclusion, Schloss Bangalore Ltd's planned IPO marks a significant milestone for India's hospitality sector, potentially raising INR 5,000 crore and setting the stage for future growth amid increasing demand for luxury accommodations. Supported by strong financial performance and an optimistic market outlook, the company's move reflects the broader trend of rising investor interest in India's burgeoning hospitality market. As domestic and international tourism continues to expand, Schloss Bangalore is well-positioned to capitalise on the opportunities ahead.
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