The initial public offer (IPO) of hospitality chain Lemon Tree Hotels was subscribed 1.19 times on the last day of bidding on Wednesday. The IPO of the mid-priced hotel chain managed to receive full subscription in a holiday truncated week (Thursday and Friday) marked by volatility due to weak global markets and March derivatives expiry. The IPO saw success when another big ticket issue (Rs 4,017 crore) of ICICI Securities saw its size cut by Rs 500 crore and managed to garner just 88% of the subscription. Its parent ICICI Bank said the bank collected Rs 3,500 crore from the IPO.
The company's IPO is of up to 185,479,400 shares (including anchor portion of 55,643,820 shares). Price band for the issue has been fixed at Rs 54-56.
Lemon Tree Hotels raised Rs 311 crore from anchor investors on March 25, 2018. Kotak Mahindra Capital, CLSA India and JP Morgan India managed the issue. The company's shares are proposed to be listed on BSE and the National Stock Exchange.
18 anchor investors invested Rs 311.61 crore at a price of Rs 56 per scrip after allotment of 5,56,43,820 shares, the firm said.
SBI Magnum Balanced Fund, DB International Asia, HDFC Small Cap Fund, Aberdeen Asian Smaller Companies Investment Trust Plc, BNP Paribas Arbitrage and Alpine Global Premier Properties Fund were among the anchor investors.
At the upper end of the price band, the issue will raise Rs 1,038.68 crore.
The hotel chain, which is backed by buyout firm Warburg Pincus and Dutch pension fund APG, has fixed the IPO price band at Rs 54-Rs 56 per share. The issue will close on March 28.
The firm's public offer comprises sale of up to 185,479,400 equity shares by the existing shareholders, including Maplewood, Whispering Resorts, Palms International and RJ Corp.
According to the draft red herring prospectus, promoters hold 31.11 per cent stake and private equity investors and other non-promoter share holders hold 68.89 per cent stake in the firm.
"Our company expects listing of the equity shares will enhance our visibility and brand image and provide liquidity to our shareholders. Listing will also provide a public market for the equity shares in India," the company said in draft red herring prospectus (DRHP).
Lemon Tree, currently the leader in terms of controlling interest in owned and leased rooms has operations spread across the value chain and range from acquiring land to owning, leasing, developing, managing and marketing hotels.
The company has 45 hotels with 4,700 rooms in 28 cities. It has a portfolio of 19 owned-hotels, three owned-hotels are located on leased or licensed land, five leased hotels and 18 managed hotels, a company statement said.
Founded in 2002 by Patu Keswani, the company has hotels under three brands - Lemon Tree Premier, which is an upscale brand; Lemon Tree Resorts, a leisure segment brand; Lemon Tree Hotels, a midscale brand and the economy brand Red Fox Hotels.