Sarovar Hotels to raise Rs 800 crore through SPV

Sarovar Hotels and Resorts will raise Rs 700-Rs 800 crore to fund its expansion plan that involves more than doubling its hotel count to 100 from the current 35 hotels in the country.

Among other fund-raising plans, the Mumbai-based multi-brand hotel management company is planning to float a special purpose vehicle (SPV). The company also has initiated talks with venture capitals and real estate companies for the SPV.

The privately-held company plans to raise about Rs 300 crore through funds from various interested parties and also through internal accruals while the balance will be raised by means of debt.

Anil Madhok, managing director, Sarovar Hotels, said, “All our current and future projects will come under the SPV brand name. We have started negotiations with a few venture capital and real estate firms. We are also evaluating other means for raising funds.”

The company, however, has no plans to dilute any major stake, where investors, other than promoters, hold 30 per cent. “We might look at some minor dilution later on for additional funds if required”, added Madhok.

The company recorded a turnover of Rs 300 crore in the last financial year and it is expected to post a growth of more than 30 per cent this year. It aims to boost its top line to touch Rs 400 crore this year and expects a a turnover of Rs 1,000 crore by the end of 2012.

In 2005, the company had raised Rs 38 crore through private placements by selling 28 per cent stake to Bessemer Venture Partners Trust (an affiliate of Bessemer Venture Partners) and New Vernon Private Equity.

Apart from the existing 35 hotels under the Sarovar banner, it is also setting up 33 hotels, which are in various stages of development and around 30 plus hotels are on the drawing board. By the end of 2012, the company will manage a total of 100 hotels and a room inventory of close to 100,000.

Sarovar operates through five hotel brands in the country, Sarovar Premier and Park Plaza in the upscale (5 star) segment, Sarovar Portico and Park Inn in the mid-market (3-4 star) segment and Hometel in the economy (3 star). Park Plaza and Park Inn are operated in India under master franchise of Carlson Hotels.

The company on Tuesday opened Grand Hometel in Mumbai, its economy segment hotel.