A significant milestone is about to be reached by The Leela Palaces, Hotels and Resorts as it gets ready to go public. Within the next nine months, it hopes to be valued at least $2.5 billion (about Rs 21,000 crore). With massive debt and defaults just five years ago, the luxury business faced formidable obstacles. This bold move represents a substantial turnaround for the company.
Brookfield, the Canadian investor and promoter of The Leela, is the driving force behind this revolutionary adventure. JM Financial and Bank of America are serving as investment bankers for the IPO. According to Mint reports, Brookfield intends to give the public a 15% initial ownership, with options for an extra 10% over the following three years.
If it is a success, the IPO might be the largest in India’s hospitality industry, with a potential valuation of over Rs 3,150 crore.
It truly is remarkable that The Leela is making a comeback. Thanks to increased margins and a continuous increase in valuations, the company has recovered from years of financial instability and debt problems to become stronger than before. According to a Mint source closely connected in the processes, “The Leela has not only emerged stronger than ever from its old worrisome debt issues, but is also seeing a steady year-on-year rise in valuations on the back of higher margins.” The Leela stands out in the hotel industry thanks to its emphasis on quality and distinctive value offer.
The Leela’s amazing turnaround is a testament to its resilience and strategic foresight, even in the face of stunning valuations from listed rivals like Indian Hotels Co. Ltd. and East India Hotels Ltd.
The purchase of four significant assets by Brookfield for Rs 3,950 crore from JM Financial Asset Reconstruction Co. in 2019 marked the beginning of The Leela’s road to redemption. This action not only reduced the company’s debt but also cleared the way for a major change in the way it operated—from an ownership-led to a management-led structure.
With bold intentions to grow this number to 20 in the near future, Brookfield has invested cash in The Leela over the last five years, increasing its footprint to include 15 hotels around India.
With the help of calculated investments and an aggressive growth plan, The Leela has established itself as a major force in the upscale hospitality market. The rebound of The Leela is a reflection of the larger recovery in the hospitality sector, which is being driven by increased consumer confidence and pent-up demand as a result of the relaxation of COVID-19 limitations. With hotels like Indian Hotels Co. Ltd. and ITC Hotels seeing unheard-of development, The Leela’s comeback marks the arrival of a new player in the industry. Industry statistics state that hotel investments in India reached $401 million in 2023, a fourfold rise over the year before. Deals in the first quarter of 2024 increased by 80% year over year, indicating the strong industry recovery that is currently taking place.
The Leela intends to expand into the housing market in addition to its typical goals of providing hospitality. Ankur Gupta, managing partner at Brookfield, revealed plans for about 20 properties under The Leela Palaces brand throughout India in a recent interview with CNBC TV18. Furthermore, Brookfield intends to enter the serviced apartment market by utilizing The Leela’s strong brand equity and stellar reputation. Investor interest in The Leela is strong as it gets ready for its initial public offering (IPO), which is a sign of confidence in the company’s growth trajectory and prospects. The Leela is positioned to revolutionize the hotel industry because to a strong foundation derived from years of reorganization and growth. An historic milestone in India’s hotel industry, the upcoming IPO of The Leela is a testament to tenacity, vision, and strategic insight.
Source – Good Returns
