Warburg invests Rs 280cr in Lemon Tree Hotels

Warburg invests Rs 280cr in Lemon Tree Hotels

Dileep Athavale / Pune August 02, 2006

Private equity firm Warburg Pincus has invested Rs 210 crore in New Delhi-headquartered Lemon Tree Hotels for an equity stake of 26%.

Patu Keswani, chairman of Lemon Tree Hotels, said the company has embarked on an investment programme of Rs 950 crore to build 11 properties across the country. "Two of these hotels are operational, and two more will open this year, in Pune and Goa, respectively," he said adding that the remaining seven are at different stages of construction.

The promoters are investing Rs 500 crore in the company, he added.

Lemon Tree operates in the mid-price segment of Rs 3,000-5,000 per room night, and caters to business and leisure travellers looking for upscale accommodation at moderate prices.

Keswani said he has promoted another hotel chain - Red Fox Hotels - which will be in the limited service budget hotel category priced in the Rs 800-2000 per room night. He added that Warburg Pincus will also invest Rs 70 crore in Red Fox for an equity stake of 26%. The total investment for Red Fox properties would be around Rs 500 crore, he added.

The first three Red Fox Hotels, aggregating to 500 rooms and targeted at the extremely price conscious business and leisure traveler, are expected to open in Mumbai, Jaipur and Hyderabad by late 2008.

"We are especially pleased that Warburg Pincus has acquired a significant part of employee shares enabling many employees to unlock more wealth by working for three years with Lemon Tree than in their previous employment of many years in other hotel companies elsewhere,