Mumbai, November 28, 2015: While domestic hospitality major Sarovar Hotels & Resorts Group is open to its PE investors “flipping” their stake with the US-based Wyndham Hotel Group, it would do so only if it gets an enterprise value of ₹400 crore.
Anil Madhok, Co-Promoter & Managing Director, Sarovar Hotels & Resorts , told BusinessLine, “The two PE investors will get our permission to sell their 30 per cent only if we get an enterprise value of ₹ 400 crore, which should fetch them ₹120 crore.’’
Sarovar Hotels & Resorts is promoted by Anil Madhok and Ajay Bakaya. It is a hotel management company and its revenues come from the management fee it charges across its 72 properties. “Our revenues are determined by the management fees, which currently stands at ₹100 crore,’’ added Madhok.
Bessemer Venture Partners Trust and New Vernon Private Equity had picked 30 per cent stake nearly nine years ago in Sarovar Hotels & Resorts.
However, while the domestic chain is not willing to offload additional stake from the promoters, getting the right valuation is going to be imperative at a time when the hospitality industry is on the cusp of a revival.
“The hospitality market is looking up as supplies of hotels have come to an end and this is the right time for PE funds to figure out if they want to sell. If they were to exit, which is long overdue, this may just be the right time for it,’’ said Madhok.
In the case of the Wyndham Hotel Group, it already runs a franchise operation across 20-25 hotels for brands such as Ramada, Howard Johnson and Wyndham.
“It is a large group with more than 5,000 hotels worldwide and will strengthen their presence in India, if they were to come as an investor in our company,’’ said Madhok.
However, this is not the first time that international chains have evinced interest in investing in the Sarovar Group.
“There were offers in the past but we were not ready. Even now we are not exactly desperate and it is up to the PE firms to decide if they want to exit. But the hospitality industry is ready for consolidation as indicated by the recent Marriott and Starwood deal,’’ he added.-Purvita Chatterjee, BusinessLine
