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Lemon Tree Hotels shares rose after the company announced a major rejig of its business, along with a new investor coming in.
Here’s what’s happening: the company is splitting its business into two separate parts so each can focus on one clear job. Lemon Tree Hotels will run the “asset-light” side, which basically means managing hotels, running daily operations, and building the brand without owning too many properties.
Fleur Hotels will run the “asset-heavy” side, which means owning hotel properties and developing new ones.
The biggest headline in this plan is the new investor. Warburg Pincus will come in as a strategic investor in Fleur Hotels. As part of the transaction, Warburg will buy APG’s entire 41.09% stake in Fleur Hotels.
APG, a large Dutch pension fund manager, already owned 41.09% of Fleur Hotels before this restructuring.
Warburg has also committed to invest ₹960 crore in Fleur Hotels in parts, whenever needed, to support future growth and expansion.
After the restructuring, Lemon Tree Hotels shareholders will directly own 32.9% of Fleur Hotels, Lemon Tree Hotels itself will hold 41.03%, and Warburg Pincus will own the remaining 26.01%.
Lemon Tree says Fleur Hotels will be listed separately within the next 12-15 months. After the split, Lemon Tree Hotels expects to become a faster-growing company with stronger returns, and it also says it aims to be a zero-debt business.
