Will subscribe EIH rights issue, could exit later: Analjit

Max India Chairman Analjit Singh, who currently holds 4 per cent stake in EIH today said he would subscribe to the Rs 1,300 crore rights issue announced by the hospitality firm.

Interestingly, the statement comes after Singh's earlier stand that he is in the process of exiting his stake in the company. "We will subscribe to the rights issue," Singh told PTI. When asked about the change of mind he said: "I can take rights and also exit later. That is also an option."

Earlier this year, Singh had reduced his shareholding in EIH to from 7 per cent to 4 per cent.

Singh's interest in the rights issue could be seen as a part of a bigger story relating EIH that includes other parties and stake holders such as Mukesh Ambani-led Reliance Industries and hospitality major ITC.

According to analysts, Analjit Singh's decision to subscribe to the rights issue could be an intention to make some long-term financial gain.

"If the issue is priced attractive then Singh could subscribe as it may provide him financial gain when he exits EIH later," Elara Capital Analyst Himani Singh said.

According to her, the issue is expected to come out in the next one month and RIL will surely subscribe in order to raise its equity.

EIH that operates Oberoi and Trident brands of hotels and resorts across India is promoted by PRS Oberoi, in which ITC holds 14.98 per cent stake.

In a sudden development, RIL had last month announced acquisition of 14.12 per cent from the promoter's stake in EIH for Rs 1,021 crore. RIL further hiked its stake marginally 14.8 per cent.

According to industry observers, RIL's buyout was aimed to disable ITC from making a hostile bid for EIH.

Earlier this year, ITC had increased its stake to 14.98 per cent in EIH triggering speculation that the FMCG-to-hospitality conglomerate could go for an open offer once it crosses the 15 per cent mark.

On September 23, EIH informed stock exchanges that the company's board had given approval to raise up to Rs 1,300 crore through the issue of shares on a rights basis. The date for the rights issue is not final yet as a committee has been constituted to finalise the ratio, issue price and all procedural modalities relating to the issue.