Tata Sons to dilute stake in Indian Hotels; looks to raise Rs 2,000 crore

Tata Sons, the parent firm of Indian Hotels Company (IHCL), plans to dilute its stake by up to 8 per cent in the hotel major, as the hospitality giant is looking to raise around Rs 2,000 crore via qualified institutional placement (QIP) in the next two weeks.

Tata Sons holds a 41 per cent stake in IHCL, the operator of the Taj group of hotels. IHCL will use the proceeds to reduce its consolidated debt worth Rs 1,905 crore (as of December last year). The debt reduction by IHCL is part of the Tata group’s plans to do so in all companies by 2025.

According to a source in the banking sector, ICICI Securities and Credit Suisse have been appointed bankers for the QIP, and they plan to start road shows for potential investors.

On Wednesday, IHCL shares closed at Rs 205 — giving it a total valuation of Rs 27,088 crore.

When contacted, a spokesperson for IHCL said the Board of Directors and shareholders of the company had approved the proposal to raise funds through QIP. “The approval is valid for one year. The Board/management will take a call on the launch at an appropriate time,” the spokesperson said.

In November last year, Tata Sons had fixed the company’s rights issue price at Rs 150 per share and retained its shareholding in IHCL. The hotel major had raised Rs 1,982 crore from the rights issue and used around Rs 1,200 crore to repay its debt while the rest was used to increase stake in other group hotel companies.

The company has reduced its net debt on a consolidated level from Rs 3,110 crore in March 2021 to Rs 1,905 crore. With the QIP issue, the company will be able to become net debt free.

On a standalone basis, IHCL’s gross debt was Rs 1,665 crore and it had liquidity of Rs 580 crore, as of December last year.

The company is following an asset-light strategy with plans to incur selective capex on priority strategic projects and pursue inorganic and organic growth strategies.