Warburg Pincus-backed Lemon Tree files for India IPO

The offer will comprise up to 196 million shares, all from existing investors and accounting for 24.9% of the company, according to a prospectus. Warburg Pincus will sell up to 94.5 million shares; currently, the GP holds 193 million shares, or a 24.5% stake, making it the largest single shareholder. 

As the offer consists entirely of secondary shares, Lemon Tree will not receive any proceeds from the sale. The company expects to benefit from enhanced visibility and brand image while providing liquidity to its shareholders. Pricing for the offering has not been announced.

Since its launch in 2004, Lemon Tree has expanded from a single hotel with 49 rooms to nearly 4,300 rooms in 40 hotels across India as of July 2017. The company operates three brands aimed at upper-midscale and midscale business and leisure travelers, and economy customers.

The company operates three brands aimed at upper-midscale and midscale business and leisure travelers, and economy customers. According to a study by Horwath HTL India, chain hotels are typically underrepresented in these markets, which are normally served by independent players with fragmented and localized ownership.

Lemon Tree, which accounts for 6.9% of rooms across the Indian mid-priced hotel chain segment, expects opportunities in this space to grow as a result of rising urbanization, increasing domestic travel and higher discretionary spending.

For the year ended March 2017, Lemon Tree recorded INR2.2 billion ($34.5 million) in revenue, up from INR 1.9 billion the year before. Over the same period, net profit grew to INR53.5 million, from a net loss the prior year of INR163.4 million.

Warburg Pincus invested in Lemon Tree in 2006, committing INR2.1 billion for a 27% stake. According to AVCJ Research, the company has also received investments from Kotak Private Equity, through its first India realty fund, and APG Asset Management.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Consumer
• IPO
• Real estate
• India
• Warburg Pincus Asia
• Exit