In a significant strategic move announced on Saturday, 10 January, Lemon Tree Hotels has set the stage for a major corporate restructuring. The company's board has greenlit a dual transaction involving global investment giant Warburg Pincus, which will reshape the Indian hospitality group's future.
Deal Details and Strategic Investment
The board approved the acquisition by Warburg Pincus's affiliate, Coastal Cedar Investments BV, of the entire 41.09% stake held by APG Strategic Real Estate Pool NV in Lemon Tree's subsidiary, Fleur Hotels Limited. This transaction will be executed via a Share Purchase Agreement.
Concurrently, the board sanctioned a substantial primary investment of up to ₹960 crore by Warburg Pincus into Fleur Hotels. This capital infusion, to be made in stages, is earmarked to fuel the subsidiary's ambitious future growth plans. Following this reorganization, Fleur Hotels is slated for a separate listing on Indian stock exchanges.
Creating Two Distinct Powerhouses
The core of the scheme involves a clear separation of the group's operations into two specialized platforms. Lemon Tree Hotels Limited will transition to a pure-play, asset-light model, concentrating solely on hotel management, branding, franchising, and digital ventures.
In contrast, Fleur Hotels Limited will become the group's dedicated, growth-focused hotel ownership and development arm. It will oversee all future acquisitions and property developments. This restructuring will be implemented through a process requiring approval from the National Company Law Tribunal (NCLT), shareholders, and other regulators.
"This scheme is intended to create a simplified, transparent, and growth-oriented structure for both companies, which we believe will enhance long-term value for our shareholders," said Patanjali Govind Keswani, Founder of Lemon Tree Hotels. Keswani will take on the role of Executive Chairman at Fleur Hotels and later move to a Non-Executive position at Lemon Tree.
Portfolio Expansion and Operational Shifts
The reorganization involves several mergers and transfers. Lemon Tree will merge two wholly-owned subsidiaries, Carnation Hotels and Hamstede Living, into itself. Four other subsidiaries will be merged into Fleur Hotels.
Furthermore, a significant portfolio of 12 hotels (11 operational and one under construction in Shimla), along with an investment in a Shillong hotel project, will be demerged and transferred to Fleur. Post this consolidation, Fleur's owned portfolio will see a substantial jump from 3,993 keys across 24 hotels to 5,813 keys across 41 hotels, positioning it as one of India's largest hospitality asset owners.
Lemon Tree will continue to manage the hotels transferred to Fleur. Anish Saraf, Managing Director at Warburg Pincus, expressed confidence in the plan, stating, "With favourable industry fundamentals and a clear strategic roadmap, we look forward to supporting the team as they continue to scale the business."
The entire process, culminating in the listing of Fleur Hotels on the NSE and BSE, is projected to be completed within 12 to 15 months.
