Park Hotels to raise ₹1,050 cr in 2nd biggest hotel IPO

Apeejay Surrendra Park Hotels, which owns and operates hotels under the "The Park" brand, plans to raise ₹1,050 crore through an initial public offering (IPO) route, in what would be the second biggest-ever hotel IPO in India. This IPO is poised to be the second largest in the hotels & resorts sector after Chalet Hotels’ ₹1,641 crore offering in February 2019. Before Chalet, Lemon Tree Hotels raised ₹1,039 crore via the IPO route in April 2018.

The Kolkata-headquartered company on Monday filed its draft red herring prospectus (DRHP) with markets regulator Securities and Exchange Board of India (SEBI) to raise ₹1,050 crore through public listing of shares on the exchanges. The IPO comprises fresh equity issue of ₹650 crore and an offer for sale (OFS) of ₹400 crore of face value of ₹1 each of the company.

The company proposes to utilise the fund raised from fresh issues of equity shares for repayment in full or in part of certain outstanding loans availed by the company estimated to be ₹550 crore. The remaining capital will be used to meet general corporate purposes.

The OFS will see promoters Apeejay Surrendra Trust and Apeejay Private offloading equities worth ₹80 crore and ₹296 crore, respectively. Besides, existing investors RECP IV Park Hotel Investors and RECP IV Park Hotel Co-Investors will sell shares worth ₹23 crore and ₹1 crore, respectively.

The company's shares will be listed on the BSE and the NSE. JM Financial Limited, Axis Capital Limited and ICICI Securities Limited are the book running lead managers to the issue.

Apeejay Surrendra Park Hotels is the 8th largest hotel chain amongst hotel chains with asset ownership in India, as per Horwath HTL report. It runs luxury boutique hotels in India under its brand, “THE PARK”, extending it further through “THE PARK Collection” and in upper-midscale categories with its brands “Zone by The Park” and “Zone Connect by The Park”.

The company has a long-standing expertise of over five decades in the hospitality business of owning and operating hotels, with its first hotel being launched under its brand “THE PARK” at Park Street in Kolkata. They have established a presence in the retail food and beverage industry through its retail brand ‘Flurys’.

Its hotel portfolio has a PAN-India presence, and it continues to attract its customers with its diversified portfolio. Apeejay Surrendra Park Hotels categorises its hotel portfolio into two distinct hotel categories based on brand classification – upscale, and upper mid-scale. “THE PARK” brand is positioned as an upscale brand with a luxury boutique offering, while “Zone by The Park” and “Zone Connect by The Park” brands are positioned at the upper midscale level, which is designed for the price conscious and design conscious customers. While “THE PARK Collection” brand encompasses small luxury properties located at selected travel destinations targeted at the luxury hotel category, “Stop by Zone” is an economy motel brand.

These hotels are differentiated through design and art, events, and entertainment and in providing unique, memorable, and immersive service experiences. Differentiation is also part of “Zone by the Park” brand, which is being specially developed for India’s tier 2 and tier 3 cities through the use of modern design and local influences.

As per the offer document, the company believes its extensive experience in developing a large hospitality business has resulted in them gaining a strong understanding of industry and market trends. The company’s vision of “Leadership through Differentiation” provides them with a competitive edge in its business, delivering superior operating performance.

As of March 31, 2023, Apeejay Surrendra Park Hotels operates 80 restaurants, nightclubs, and bars, offering a wide selection of culinary experiences. The nightclub and entertainment division contribute to its brand positioning and allow cross-selling opportunities. They have created brands such as Zen, Someplace Else, Tantra, Roxy, iBar, The Leather Bar, Pasha, and Aqua. 

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