Indian Hotels Company to launch Rs 2,000-core QIP, issue floor price set at Rs 203.48

Puneet Chhatwal, MD and CEO of Indian Hotels Company (File Image)

Indian Hotels Company (IHCL) is set to launch a qualified institutional placement (QIP) worth Rs 2,000 crore, sources told The Economic Times.

The aim is to bolster its business expansion on the other side of the COVID-19 pandemic, the report said.

Sources further told the paper that ICICI Securities and Credit Suisse have been roped in to help the Tata Group backed hotel chain raise funds from a clutch of local and global institutional investors. Each investor will get shares of the company, the report said.

Moneycontrol could not independently verify the report.

QIP Committee approves issue opening

On March 22, the company informed the exchanges that its Board of Directors’ QIP Committee in a meeting approved opening the issue on March 22; approved and adopted the preliminary placement document and application form (both dated March 22); and approved floor price for the issue at around Rs 203.48 per equity share. Face value is Re 1 per share.

“We wish to inform you that pursuant to the approval accorded by the Board of Directors of the company at its meeting held on October 21, 2021 and the special resolution passed by way of postal ballot/e-voting on January 29, 2022 by the Members of the Company, the QIP Committee 2021-22 of the Board has, at its meeting held today i.e. March 22, 2022, inter alia, passed resolutions for the following: (a) Authorised the opening of the Issue today, i.e. March 22, 2022; (b) Approved and adopted the preliminary placement document dated March 22, 2022 and the application form dated March 22, 2022 in connection with the Issue; and (c) Approved the floor price for the Issue, based on the pricing formula as prescribed under the SEBI ICDR Regulations,” the statement read.

IHCL sets floor price of Rs 203.48 per equity share

It said that “relevant date for purpose of the issue” is March 22. “The floor price in respect of the aforesaid Issue, based on the pricing formula as prescribed under Regulation 176(1) of the SEBI ICDR Regulations is 203.48 per equity share.”

The company may offer a discount of not more than 5 percent on the floor price. The statement did not specify the issue price, adding that it “will be determined in consultation with the book running lead managers appointed for the issue”.

Earlier in October 2021, IHCL announced plans to raise up to Rs 2,000 crore each through rights issue and QIP (total Rs 4,000 crore equity funds raise) subject to regulatory approvals, the ET report noted, adding that IHCL did not respond to queries.

IHCL MD and CEO Puneet Chhatwal had said the money would enable the chain to be a zero debt company in the future and will help fund the company's expansion as well as its capital expenditure plans.

Expansion plans

IHCL has plans to open more than one hotel a month in CY2022, having signed on 17 new hotels for the year; and with a pipeline of over 60 hotels. It has a portfolio of 232 hotels, including 58 under development globally across four continents, 11 countries and over 100 locations.

Chhatwal on March 22 told CNBC-TV18 that the hospitality business is picking up at a healthy pace, noting that bookings in March, April and May 2022 are higher than in the same period in 2019.

“What gives me optimism and hope is that every time things open up this industry bounces back faster than anybody ever thought. In March, April and May, daily business on the books is higher than what it was in 2019,” he stated.

Chhatwal also credited domestic business and travel for the buoyant conditions. “Our domestic contribution of tourism is very strong, that makes the sector a bit more resilient than we all would have thought. Pre-pandemic I don't think many really respected the contribution of domestic business and leisure as much as we do today,” he noted.

He was also “all-in-all positive” that business will further pick up once international flights and international travel resumes from March 27.

Chhatwal did acknowledge that COVID-19 variants such as the Omicron and BA2 have posed challenges, and also acknowledged geo-political tensions due to the Russia-Ukraine War, but maintained that the long-term outlook of the industry is going to be far more positive than it was 5-10 years ago.

"What we are experiencing in the last four to six weeks is such a strong revival. The long-term outlook of the hospitality industry is going to be far more positive than it ever was 5 to 10 years ago,” he told PTI.