Pride Hotel sells 11% stake to Kotak fund

Plans Rs 125 crore IPO by year-end or early next year

MUMBAI: The hunger for a piece of the hospitality pie in the country seems to be growing by the day.

Kotak India Real Estate Fund has just acquired around 11.11% stake in Mumbai-based The Pride Group of Hotels at a cost of Rs 45 crore.

Earlier this year, in May, Temasek Holdings had acquired a 21.74% stake in GL Hotels, also based in Mumbai, for Rs 125 crore.

DNA Money had, in June, reported a possible stake acquisition in the Pride Hotel chain to the tune of Rs 50 crore. S P Jain, chairman, had then said that the management was talking to a very prominent company for the equity investment.

The group, which currently operates four five-star hotels, has chalked out a Rs 350 crore expansion-cum-renovation plan.

The expansion plan includes setting up new five-star hotels in Mumbai, Goa, Bangalore and Hyderabad in addition to a resort hotel-cum-spa at Alibaug.

At its three existing properties in Pune, Ahmedabad and Nagpur, on the other hand, the hotel chain is adding room inventory. Each hotel will see an addition of around 50 rooms.

The management envisages an overall inventory of 1,150 hotel rooms in key cities by December 2009. “The equity investment from Kotak will be used to part-finance these activities in the coming years,” Jain said.

The hotel chain also plans to raise funds to the tune of Rs 125 crore via an initial public offering (IPO).

“The IPO should hit the market towards this year-end or early next year,” Jain said.

As for the balance funding, Rs 75 crore would come from internal accruals and Rs 50 crore would be raised as debt, he added.