Mumbai (TOI): India-born, London-based businessman Raj Bagri is buying the marquee Leela hotel in Goa for Rs 725 crore, marking the biggest single property deal in the Indian hospitality sector. This is the latest transaction by Bagri, promoter of the Metdist Group, which owns metal assets in Malaysia and other parts of the world, after the acquisition of denim brand Spykar last year.
While the ownership of the 206-key hotel is changing hands from the Nairs-owned Hotel Leelaventure to Metdist, the former will continue to manage and operate the luxury hotel, which will retain the name The Leela.
As per the arrangement, Ceres Hotels, a local unit created by the Metdist Group, will acquire the Leela, Goa, marking the diversified enterprise's foray into hotel ownership in Asia's third-largest economy.
The transaction, subject to regulatory approvals, is expected to be completed by the end of this year.
Built in 1991 and touching the beach, The Leela, Goa, property is spread over 50 acres, and is one of the top-performing hotels in the country's iconic party destination. In fiscal 2015, the Goa property contributed Rs 119 crore (15 per cent) to Hotel Leelaventure's total income of Rs 762 crore.
"This investment signifies Metdist Group's confidence in building and growing businesses in India," said Raghav Mittal, president and CEO of MetTube, the parent of Ceres Hotels. While Raj Bagri, who was the first non-British chairman of the London Metal Exchange and a former Conservative member of the House of Lords, is the chairman of the low-profile Metdist, his son Anup Bagri manages the group, which also has interests in real estate and insurance.
The deal comes close on the heels of ITC Hotels acquiring the 250-room Park Hyatt, Goa, for Rs 515 crore early this year.
The sale of the Goa property is part of Hotel Leelaventure's strategy to pare debt of Rs 5,000 crore. JM Financial Asset Reconstruction, the asset reconstruction firm of financial services conglomerate JM Financial, which took over a significant chunk (about Rs 4,000 crore) of the hospitality chain's debt from a consortium of lenders has advised the sale of the company's certain properties including the Goa hotel.
"The divestment of the Goa hotel and retaining the management of the hotel under the Leela brand is in line with our strategy to restructure our debt, follow an asset-light strategy and manage more hotels," said Vivek Nair, chairman and managing director of Hotel Leelaventure. In 2011, the company, in which India's second largest hospitality chain ITC owns a stake, sold the Leela hotel, Kovalam, for Rs 500 crore to Saudi Arabia-based entrepreneur Ravi Pillai.
Hotel Leelaventure is also exploring options to sell the 326-room Chennai hotel or bring in new investors at the corporate level as part of its debt restructuring plan. "We are working with JM Financial for a company-level solution and not unit by unit," Nair said.
Phto credit: TOI
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