Prospectus filed for Lemon Tree Hotels IPO-2017-2018

New Delhi-based hospitality chain Lemon Tree Hotels has filed a draft prospectus with capital market regulator SEBI for launching its IPO. The company, promoted by Patanjali Govind Keswani and Spank Management Services, proposes to list on the bourses through the sale of 195,797,000 equity shares. These shares are to be offered by existing shareholders and the company will not get any proceeds from the IPO. Lemon Tree Hotels IPO will constitute up to 24.9% of the post-offer paid up equity share capital of the company.

Lemon Tree Hotels IPO: OFS to be led by Maplewood

The Offer For Sale (OFS) will be led by Maplewood which plans to sell 94,500,053 shares while Ravi Jaipuria’s RJ Corp plans to offload 25,320,584 shares. With 192,908,118 shares or 24.53% equity stake, Maplewood is the leading shareholder in the company. RKJ HUF plans to reduce its shareholding by 13,999,416 shares and 10,317,600 shares will be sold by Citron. Other sellers include Whispering Resorts, Swift Builders, Five Star, Palms International, Satish Chander and Raj Pal Gandhi.

40 hotels and counting

According to the draft prospectus, the company is the largest player in the mid-priced hotel sector in India. Opening its first hotel with 49 rooms in May 2004, Lemon Tree has expanded its reach to 4,289 rooms in 40 hotels (including managed hotels) across 24 cities in India as of 31 July 2017.

The company operates in the mid-priced hotel sector, consisting of the upper-midscale, midscale and economy hotel segments. In the upper-midscale, it has a presence through Lemon Tree Premier while Lemon Tree Hotels caters to the midscale segment. Red Fox brand targets the economy hotel segment.

For the year ended 31 March 2017, the company posted a profit of INR5.3 crore (INR53.52 million) on revenues of INR223.7 crore. It has been profitable only for two years out of the last five years.

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