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Most of the proceeds — ₹1,100-1,150 crore—will go towards reducing debt, he said. The Gurugram-based company has 31 hotels, both owned and leased, across the country with 4,800 rooms. Earlier this year, it acquired ACIC, which had six operating hotels. The price band per share has been set between ₹119-126. Samhi launched in 2010 and works with eight hotel management companies such as Marriott International Inc., Hyatt Hotels Corp. and Hilton, among others. It first filed its papers with the Securities and Exchange Board of India (Sebi) for an initial public offering (IPO) of up to ₹2,000 crore in September 2019 and obtained the markets regulator’s approval in November 2019, but it did not go ahead with the plan. Edited excerpts:

How do you plan to use the IPO proceeds?

We are the third largest hotel room owner in India now. The idea is two-pronged. The first would be to reduce our debt, which, of course, was impacted by the onset of the pandemic. We will use this for payment of debt. While we are looking to solve for leverage, we also want to be able to create recurring free cash and de-leverage the firm. The net debt is ₹2,850 crore and the ₹1,100-1,150 crore of the IPO proceeds will be used to furnish this debt.

How do you see the company growing post the ACIC acquisition?

We added 965 rooms from the ACIC portfolio to ours. This integration will create a reasonable upside, both in terms of operating margins as well as efficiencies. Post our acquisition, we are now at 4,800 rooms. We see some really good growth opportunities in the next few quarters within the company.

About 3,900 hotel rooms in this portfolio are stable and performing, and about 900 are due for renovation and rebranding. We have observed in the past that whenever we take a hotel into rebranding and renovation, there is a significant improvement in its performance. We are quite excited about this. It will need about ₹200-odd crore in capital from internal accruals post-IPO to renovate and reposition.

Will you add any more hotels to your portfolio?

Yes, about 620 new rooms will be added to the portfolio. All these assets are on our balance sheets within our portfolio. For instance, we have a hotel in Kolkata. We also have land in Navi Mumbai. We will also add rooms in our hotels in Bengaluru, Chennai and Pune. This development will begin by September 2024 and will go on till 2026.

The covid-19 pandemic was a difficult time for business hotels. Has demand for business hotels returned now?

Domestic demand has recovered completely and is at a significantly higher level than pre-pandemic. International demand is still not fully recovered and will take a little bit more time due to geopolitical concerns. If we look at the blended performance of comparable hotels—a measure of the financial and social impact of an investment—has now surpassed pre-pandemic levels, despite the international business. When the international business returns, there will be a big upside to hotels.

Will you also run leisure hotels?

We have to respond to opportunities, but our dominant strategy will be to stick to business hotels in gateway cities, which effectively are tier-I cities. These will be cities with reasonable office spaces and a large amount of flight communication. Today, 80% of our business comes from tier-I cities. Markets like Bengaluru and Hyderabad have been very strong in terms of these markers. We have the ability to operate across price points across hotels and different price points and can have many more hotels in the same market.

So far, you have worked with a few international operators. Are you going to continue to be brand agnostic?

That’s right. We have a strong relationship with our existing partners, and there are inherent economies of scale when you integrate new hotels within existing hotel platforms. But we continue to be agnostic. We will evaluate Indian hotel operators as well – that have strong distribution and brand recall.

Do all your shareholders remain the same, or have you given an exit to any of them?

We have the same shareholders as before, including Equity International, GTI Capital Group and Goldman Sachs. The only difference is that IFC, Washington, which used to own a compulsory convertible debenture (CCD), will be converted to a single share, and most of the other economic value will be redeemed and paid through the IPO proceeds.

Ahead of the IPO launch, Blue Chandra Pte. Ltd sold 10.32 million shares or 8.4% stake to investor Madhusudan Kela’s wife, Madhuri Kela. Nuvama Crossover Opportunities Fund and TIMF Holdings have also picked up a stake for a total consideration of ₹130 crore.

Updated: 12 Sep 2023, 12:22 AM IST