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City hotel co to raise Rs 30 crore in IPO to fund expansion

Press Trust of India  |  Kolkata 

Kolkata-based Dream Gateway Hotels, part of realty Jain Group, will raise 30.51 crore through its maiden public offer by early July to fund expansion, a top said today.

The company currently owns only one hotel, Airport Kolkata, and the entire proposed proceeds will be invested in the existing 137 room property for further expansion following excellent response since unveiling of this property, Dream Gateway said here.

The company is going ahead with the proposed fixed price IPO issue despite pricing expectations were much lower at 90 per share against previous expectations of 140 per share.

"We have arrived at the pricing of Rs 90 per share based on the feedbacks by the Merchant bankers. That (Rs 140/share) price was based on aspiration at that point of time," Jain Group ED Rishi Jain said.

The shares would be listed on the BSE SME platform issuing fresh 32.21 lakh shares of Rs 10 each to investors and additional 1.7lakh shares to market maker at a price of Rs 90 per share.

In BSE sme platform, market maker is a must for each company to offer liquidity to the investors.

The expansion will be adjacent to the existing property of and will add another 90-100 keys at an additional cost of Rs 70-75 crore.

The dilution by the promoters post fresh issue will be 28 per cent, Jain said. The group owns 100 per cent now.

The revenue from is projected at Rs 80 crore in 2018 up from close to just under Rs 30 crore in 2017. The projection for 2020 is Rs 129 crore.

The company said it proposes to develop two other in Siliguri and Durgapur and for which land is already in place.

Total additional Rs 240 crore, is lined up in these two proposed hotel properties to create total 180 rooms. Construction of the hotel is expected to begin by end of this year, Jain said.

Intercontinental Group owns the management contract for hotel and the same operator is expected for the next two properties, he said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, June 12 2018. 19:00 IST