No financial details of the deal were available, but sources say Credit Suisse will pay between $50 million and $55 million for a 15% stake in Park Hotels. This places the equity value of the investee company, which is closely held by the Apeejay Surrendra Group, at around $350 million.
Sources familiar with the deal say the auction run by advisor ICICI Securities on behalf of the vendor attracted interest from around eight leading real estate investors. An ICICI Securities spokesperson confirmed the deal but not the numbers.
The investment will be by way of issuance of fresh equity shares. Credit Suisse will nominate one director to the board of Park Hotels, adding to the existing six-member board.
Park Hotels will deploy the funds raised towards further expansion of its hotel chain. The company currently operates properties in Bangalore, Chennai. Delhi, Kolkata, Navi Mumbai and Vishakapatnam. The properties are positioned as premium, boutique hotels.
The chain started with the 150-room Park Hotel in Kolkata in 1967 and a second property in Vishakapatnam in Andhra Pradesh in 1968. The company began to expand rapidly about two decades ago. Its most recent addition is the 80-room Navi Mumbai property which opened earlier this year.
The expansion has coincided with an unprecedented boom in hotel room occupancy in IndiaÆs metropolis cities. Hotels in business destinations routinely have 100% occupancy and room tariffs have been on the increase year-on-year for the last five years. In cities like Bangalore and Hyderabad, hotel rooms at four-star chains command prices upwards of $300 a night in peak season.
The Park Hotels are closely held and no financial details of performance are available. The chain is part of the Apeejay Surrendra Group which has interests in shipping, tea, real estate and financial services.
This is Credit SuisseÆs second investment in the real estate sector in India. It earlier invested Rs3 billion ($74.6 million) in a Pune development.
Credit Suisse had no comment.
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