The shares of Samhi Hotels surged nearly 11 percent on April 24 after the company announced that it has entered into a strategic partnership with global institutional investor GIC. The shares of the company were trading at Rs 193 apiece in the afternoon.
As part of the partnership, GIC will acquire 35 percent stake in Samhi's subsidiaries that own luxury hotels Courtyard & Fairfield by Marriott in Bengaluru ORR, Hyatt Regency in Pune and recently acquired Trinity Hotel in Bengaluru Whitefield. The said acquisition will be made against an investment of approximately Rs 752 crore at an enterprise value of Rs 2,200 crore. Out of the amount, Rs 603 crore will be used to reduce Samhi's debt and cover deal expenses. The rest will be used to partly fund the capital expenditure for the Westin or Tribute Portfolio Bengaluru Whitefield dual branded hotel over the next two years.
After the transaction closes, the company expects its debt to be reduced by nearly Rs 580 crore. This will have a positive impact of 15-20 percent on the company's net profit, Samhi added. Additionally, its net debt to EBITDA ratio is also expected to improve from 4.9x to 3.5x after the deal closes, and further improve to 3x in the next 12 months.
"The transaction follows our stated strategy of capital recycling and will lead to significant reduction in debt and partnership with a global investor of GIC's stature for funding further growth," Samhi said in an exchange filing.
The company further said that the reduction in debt and part funding of new projects will act as a significant boost to its future cashflows.
The transaction structure as announced in an exchange filing is as follows:
| Samhi's subsidiary | Assets | Transaction Structure |
| SAMHI JV Hotels Pvt. Ltd | Courtyard & Fairfield, Bengaluru ORR | Investment of Rs 376 crore via combination of primary infusion and secondary sale of shares. Funds to be used for repayment of debt at SAMHI JV and SAMHI group entities. |
| Ascent Hotels Pvt. Ltd | Hyatt Regency, Pune | Investment of nearly Rs 227 crore via primary infusion. Funds to be used for repayment of SAMHI shareholder loan. |
| Innmar Tourism & Hotels Pvt. Ltd | Trinity, Bengaluru Whitefield (to be rebranded as Tribute Portfolio & new addition of Westin Bengaluru) | Investment of around Rs 149 crore via primary infusion. Funds to be used for pending capital expenditure of Westin/Tribute Portfolio Bengaluru Whitefield. |
While speaking to CNBC-TV18, Samhi CEO Ashish Jakhanwala said the deal is set to reduce its debt significantly, and free up a lot of the company's cash flow. "GIC and Samhi are committed to growing this whole partnership to about $300 million. So we do expect both partners to put more capital for future growth in this business," he said.
When asked about when the deal is expected to be closed, the CEO said that it is subject to approval from shareholders. "We should get done by June-end," he further said.
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