The company plans to allocate the Net Proceeds for several strategic purposes including to fully or partially repay certain outstanding debt incurred by both the Company and its Material Subsidiary, provide consideration for the acquisition of a proportionate share of land from our Promoter, BEL and pursue inorganic growth opportunities through acquisitions and other strategic initiatives, as well as for general corporate purposes.
The proposed IPO offering involves a fresh issuance of equity shares at a face value of Rs 10 each, as detailed in the submission to the Bombay Stock Exchange (BSE). “The Promoter will continue to hold a significant equity stake in the hotel development arm after the Issue and their interests may differ from those of the other shareholders.As on the date of this DRHP the Promoter holds 100.00% of the pre-Issue issued, subscribed and paid-up Equity Share capital of the hotel development firm”, DRHP mentioned.
Separately, the firm intends to develop five additional hotels under global hospitality companies and diversify the geographical footprint, to reduce our exposure to local, seasonal and cyclical fluctuations and to access a more diversified guest base across geographies. “We may consider acquiring new land parcels to expand our portfolio to newer geographies across India such as Goa and South India for developing new hotels,” the company said.
Brigade hospitality plans to develop a luxury beach resort in Chennai and two upper midscale hotels in Bengaluru. “With respect to the luxury beach resort in Chennai We have entered into a non-binding term sheet or letter of intent with Hyatt in India to develop the resort under the ‘Grand Hyatt’ brand, however both the parties are yet to agree on the definitive management agreements for the same. Further, with respect to the two upper midscale hotels in Bengaluru, we have entered into a non-binding memorandum of understanding (“MoU”) with Marriott to develop these hotels under the ‘Fairfield by Marriott’ brand and the terms of such MoU are subject to the approval of Marriott’s board of directors and signing of the definitive agreement”, the company said in DRHP.
The Bengaluru based company also intends to develop a luxury hotel under the InterContinental brand in Hyderabad for which the Promoter, BEL has entered into a definitive agreement with InterContinental Hotels Group. “We plan to develop a wellness resort on 14.70 acres in Vaikom, Kerala of which we own 7.08 acres and have entered into a memorandum of agreement dated October 21, 2024with Brigade Hospitality Services Limited to purchase the balance 7.62 acres”, it said.The company plans to complete the construction of the luxury beach resort in Chennai (Tamil Nadu) and the two upper midscale hotels in Bengaluru by Fiscal 2028 and the remaining two hotels including the wellness resort by Fiscal 2029.
Separately, Brigade hotels has entered into hotel operator services agreements and other related agreements with Marriott, Accor and InterContinental Hotels Group to receive operating and marketing services for its hotels. Currently, a significant portion of the company’s revenues is derived from four hotels located in Bengaluru contributing 62.91% of revenue in fiscal 2024, while a portion of revenues from the hotels Sheraton Grand Bangalore at Brigade Gateway, Holiday Inn Chennai OMR IT Expressway and Holiday Inn Bengaluru Racecourse contributes 61.71% of the revenue from operations
As the second-largest owner of chain-affiliated hotels in South India, Brigade Hotel Ventures commands a significant position among major private hotel asset owners in the region, which includes the states of Kerala, Andhra Pradesh, Tamil Nadu, Karnataka, Telangana, and the Union territories of Lakshadweep, Andaman and Nicobar Islands, and Puducherry.
The company entered the hospitality sector in 2004 with the launch of its first property, Grand Mercure Bangalore, which commenced operations in 2009.
Currently, Brigade Hotel Ventures boasts a diverse portfolio of nine operational hotels across key locations such as Bengaluru, Chennai, Kochi, Mysuru, and GIFT City, collectively offering a total of 1,604 rooms. These properties are managed in partnership with leading global hospitality brands, including Marriott, Accor, and InterContinental Hotels Group.
For this IPO, JM Financial Limited and ICICI Securities Limited have been appointed as the Book Running Lead Managers.
As per industry estimates, as of June 30, 2024, India boasts a total of 192,000 chain-affiliated hotel rooms across various segments. The luxury-upper upscale categories hold a 34.8% market share, the upscale and upper midscale segments constitute 38.6%, while the midscale and economy segments account for 26.7%. The representation of international chains has increased significantly, climbing from 21% in Fiscal 2001 to a consistent range of 45-48% over the past decade, with an expectation of stabilizing at approximately 47% by the conclusion of Fiscal 2029. According to announcements up until September 20, 2024, an additional 100,000 rooms are projected to be added between July 2024 and March 2029.