Schloss Bangalore, the luxury hospitality group behind The Leela Palaces in India, has filed for a $599 million IPO, the largest ever in India’s hotel industry. The company aims to capitalize on the growing demand for high-end accommodations in India while also paying down debt. The Draft Red Herring Prospectus outlines ambitious plans, with $359 million to be raised through fresh share issuance, while Brookfield Asset Management affiliate Project Ballet Bangalore Holdings will sell shares worth $240 million. With 3,382 keys across 12 operating hotels in 10 Indian cities, The Leela is already a prominent name in India’s luxury hospitality sector.
The prospectus reveals plans to expand by adding eight more hotels with 833 keys by 2028, including ventures into new segments like wildlife and heritage tourism. The Leela intends to further expand by acquiring and developing five new hotels in Agra, Srinagar, Ayodhya, Ranthambore National Park, and Bandhavgarh National Park. The company has also entered into hotel management agreements for new hotels in Hyderabad and Sikkim, as well as luxury serviced apartments in Mumbai international airport district. This diversification is in line with broader trends in luxury travel, where experiential tourism is gaining popularity.
The IPO positions The Leela alongside other prominent Indian hotel groups, including Indian Hotels Company, Oberoi Hotels, and Lemon Tree Hotels. As more hospitality companies go public, the battle for investor attention is fierce. The Indian hospitality industry witnessed significant investments in 2023, with a transaction volume nearly four times higher than the previous year. The IPO marks a remarkable turnaround for Leela, which faced financial distress five years ago. Brookfield’s 2019 acquisition of key assets was a lifeline, allowing the company to focus on expansion, brand building, and debt reduction.
A major portion of the IPO proceeds will go toward reducing debt, with the company reporting a loss in fiscal 2024 but showing an uptick in revenue per available room. The IPO will be a key test of investor confidence in the luxury travel segment as the industry recovers from the pandemic. The IPO will be managed by a consortium of 11 merchant bankers, including JM Financial, BofA Securities India, Morgan Stanley India Company, and others. KFin Technologies has been appointed as the official registrar to the issue, managing the administrative aspects of the IPO.
Overall, the IPO filed by Schloss Bangalore, the group behind The Leela Palaces, is a significant development in the Indian hospitality industry. The company intends to raise a substantial amount of funds, expand its footprint, and reduce debt through the IPO. With demand for high-end accommodations on the rise and broader trends in luxury travel favoring experiential tourism, The Leela is well-positioned to benefit from the IPO and cater to the evolving needs of luxury travelers in India. As the industry continues to recover from the impact of the pandemic, the IPO will serve as a crucial indicator of investor confidence in the luxury travel segment.
