Jacob Ballas Capital India and JM Financial Equity Fund are in talks to pick up stakes in Indore-based 3-star hotel and restaurant chain — Sayaji Hotels. Sources said the funds are looking to pick up around 10% stake in the publicly-listed company and the deal is expected to be finalised by the month-end.
When contacted, Sayaji Hotels managing director Sajid Dhanani confirmed that his company had been approached by different funds. “Nothing has been firmed up as yet,” he added.
Sources said the company is raising funds by issuing fresh equity. However, the price at which the equity would be issued could not be ascertained. JM Financial would be investing through JM Financial Equity Fund, while Jacob Ballas Capital India is an NBFC focussing on private equity advisory services and has two India-focused private equity funds.
Sayaji Hotels scrip closed at Rs 64, up 1.5% from the previous close on BSE on Tuesday. Currently, promoters hold 48.4% stake, while public holding stands at about 51.6%, of which Clearwater Partners holds around 14%.
The fresh funds are being infused to expand its restaurant chain — Barbeque Nation. The company plans to set up 100 such outlets by 2010 from the existing five. It is also considering taking the franchise route to set up restaurants abroad.
Sayaji Hotels presently owns and operates hotels at Indore and Baroda and has also developed a shopping mall. It is also in the process of setting up a 4-star hotel at Pune, which will be completed by 2008-end. The funds for the project were raised through a preferential issue and an FCCB issue last year. The company, which recorded an annual turnover of Rs 45 crore in FY07, plans to scale the Rs 100-crore mark within two years.
Funds have been flocking to the hospitality sector in a bid to capitalise on the emerging opportunities, said industry experts. Sayaji is one of the few listed companies in its space. Recently, UK-based Acacia Capital Partners bought about a 3% stake in the company through open market purchases in October. Sources said it is looking to further hike up its stake to 10%.
Source: Economic Times