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Roots Corporation, a wholly owned subsidiary of Indian Hotels (IHCL), has approved
the investment of INR 1.5 bn in tranches for acquiring equity stake in it by Omega TC
Holdings (Omega), a private limited company incorporated under the laws of
Singapore.
In addition, Omega will also acquire compulsorily convertible preference shares (CCPS)
from some existing shareholders for an aggregate consideration of INR 700 mn. The
CCPS along with the above mentioned equity shares will give Omega a minority stake
(on a fully diluted basis) in Roots Corporation. In addition, Omega will also have an
option to invest a further INR 1 bn in Roots Corporation by March 2014, subject to
satisfaction of certain conditions.
Our take
As of December 2010, Roots Corporation was expected to have 25 hotels with
approximately 2,600 rooms. As of March 2010, it had gross fixed assets (GFA) of
INR 2.6 bn or approximately INR 1.3 mn per room (~2,000 rooms as of March 2010).
Assuming that post conversion of CCPS, Omega will have 49% stake in Roots
Corporation, it seems the latter has been valued at approximately 1.4-1.5x per room
investment made by IHCL.
We believe the stake sale in Roots Corporation is a right step by IHCL to reduce its
overall debt level.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Roots Corporation, a wholly owned subsidiary of Indian Hotels (IHCL), has approved
the investment of INR 1.5 bn in tranches for acquiring equity stake in it by Omega TC
Holdings (Omega), a private limited company incorporated under the laws of
Singapore.
In addition, Omega will also acquire compulsorily convertible preference shares (CCPS)
from some existing shareholders for an aggregate consideration of INR 700 mn. The
CCPS along with the above mentioned equity shares will give Omega a minority stake
(on a fully diluted basis) in Roots Corporation. In addition, Omega will also have an
option to invest a further INR 1 bn in Roots Corporation by March 2014, subject to
satisfaction of certain conditions.
Our take
As of December 2010, Roots Corporation was expected to have 25 hotels with
approximately 2,600 rooms. As of March 2010, it had gross fixed assets (GFA) of
INR 2.6 bn or approximately INR 1.3 mn per room (~2,000 rooms as of March 2010).
Assuming that post conversion of CCPS, Omega will have 49% stake in Roots
Corporation, it seems the latter has been valued at approximately 1.4-1.5x per room
investment made by IHCL.
We believe the stake sale in Roots Corporation is a right step by IHCL to reduce its
overall debt level.
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