Intercontinental Picks 12.5% In Gl Hotels

The US-based Intercontinental Hotel Corporation (IHC) has picked up a 12.5 per cent stake in the Ravi Ghai-promoted G L Hotels Ltd which is setting up a five-star deluxe property in Mumbai.

Intercontinental is pumping in $3 million for the project, sources said. The investment consists of a hefty premium on shares, they added.

The company has already brought in the money, which has been registered with the Reserve Bank of India (RBI). Now the company has sought the approval of the Foreign Investment Promotion Board (FIPB). Though the decision of the board could not be ascertained, it is learnt that the department of economic affairs (DEA) has objected to the proposal as the firm's plea to FIPB for infusing foreign equity is post-facto.

In its application filed with the FIPB, G L Hotels has stated that IHC has acquired 8,77,047 equity shares of Rs 10 each at a premium of Rs 147.50 per share amounting to $3 million. The shares are being allotted to IHC on a preferential basis.

G L Hotels said IHC had agreed to be a strategic partner and shareholder and provide technical and management services to its upcoming hotel in Mumbai. IHC's shareholding in G L Hotels will aggregate to 12.5 per cent of the enhanced paid-up capital of the company.

GL Hotels also regretted its decision of not seeking the board's approval earlier.

Industry sources said G L Hotels was constructing a new five-star deluxe hotel at Marine Drive in Mumbai having at least 60 suites. The property will be managed by IHC through a technical as well as management services collaboration.

Since Intercontinental has a tie-up with the Lalit Suri-promoted Bharat Hotels, it is required to procure a no-objection certificate from Bharat Hotel to go ahead with the proposed project.

According to executives in Bharat Hotels, Suri has given their no-objection. Meanwhile, Suri also has plans to set up a new hotel at Mumbai which is expected to be operational by the next year. Earlier, both IHC and Bharat Hotels had an exclusive tie-up for the Indian market but the agreement was later modified and made non-exclusive.

Now, both the companies can tie-up with other companies as well, but only after obtaining an approval from the partner. Since then, Suri is promoting his hotels with the 'Grand' brand along with IHC. Even the flagship New Delhi property of Bharat Hotels now sports a 'Grand' prefix.