Samhi Hotels IPO to open on September 14, fresh issue size revised upwards to Rs 1,200 crore

Privately held Samhi Hotels has reserved 75 percent of the issue size for qualified institutional buyers.

Equity International, ACIC Mauritius, and Goldman Sachs-backed Samhi Hotels is set to launch its initial public offering on September 14. The price band is yet to be announced but recently, sources told Moneycontrol that the issue size is likely to be around Rs 1,400 crore.

The offer comprises a fresh issuance of shares worth Rs 1,200 crore and an offer-for-sale (OFS) of 1.35 crore equity shares by three shareholders.

The fresh size has been revised upwards from Rs 1,000 crore earlier to Rs 1,200 crore, and also OFS size increased from 90 lakh shares to 1.35 crore shares.

Singapore-based Blue Chandra Pte Ltd, owned by Equity International Fund V, will offload 84.28 lakh equity shares in the OFS, while Goldman Sachs Investments Holdings (Asia) will be selling 49.31 lakh shares and GTI Capital Alpha 1.4 lakh shares in the OFS.

The net fresh issue proceeds will be utilised by the company mainly for repaying debts amounting to Rs 900 crore, and the remaining for general corporate purposes, while the OFS money will go to selling shareholders. As on June 2023, it had outstanding borrowings of Rs 2,812.5 crore on a consolidated basis including Rs 142.9 crore of FCCDs.

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Privately held Samhi Hotels has reserved 75 percent of the issue size for qualified institutional buyers, 15 percent for high networth individuals and the remaining 10 percent for retail investors.

The offer will close on September 18, while the anchor book, a part of QIB, will be opened for a day on September 13.

Financial Performance

So far it is a loss-making company as per the financials reported in the prospectus, though managed to narrow losses year after year. The consolidated net loss for the year ended March FY23 stood at Rs 338.6 crore, narrowed from Rs 443.25 crore in the previous year, backed by strong operating numbers and topline performance.

Consolidated revenue from operations grew by 129 percent on-year to Rs 738.6 crore in FY23, while the EBITDA (earnings before interest, tax, depreciation and amortisation) increased by nearly 21-fold to Rs 237.7 crore from Rs 11.4 crore and the margin expanded sharply to 32.2 percent from 3.54 percent during the same period.

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Within 12 years of starting the business operations, Samhi Hotels has built a portfolio of 3,839 keys across 25 operating hotels in 12 of India’s key urban consumption centres, including Bengaluru, Hyderabad, National Capital Region, Pune, Chennai and Ahmedabad as of March 2023. Pursuant to the completion of the ACIC acquisition on August 10, 2023, its portfolio has further increased to 4,801 keys across 31 operating hotels.

The company acquires or builds primarily business hotels, and takes steps to further upgrade properties and engage with established branded hotel operators to allow the hotels to be appropriately positioned within the market. Once the completion of the one-time upgrade of the property, it deploys its in-house and proprietary asset management tools and capabilities to further enhance the ongoing financial and operational performance of the property.

Shareholding

Blue Chandra is the largest shareholder in the professionally managed company with a 30.65 percent stake. ACIC Mauritius I & II together hold a 30.51 percent stake, while Goldman Sachs Investments Holdings (Asia) has a 17.94 percent shareholding. GTI Capital Alpha and Sarvara Investment Fund I own 11.20 percent and 6.68 percent stake respectively.

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The basis of allotment of IPO shares will be finalised by the company in consultation with the BSE, by September 22 and the eligible investors will get the shares in their demat accounts by September 26. The refunds will be credited to bank accounts of unsuccessful investors by September 25.

The prominent branded hotel ownership and asset management platform will debut on the BSE and NSE on September 27.

JM Financial and Kotak Mahindra Capital Company are the merchant bankers to the issue, while KFin Technologies is the registrar.