IPO Note : Brigade Hotel Ventures Ltd Choice Broking Ltd
Salient features of the IPO:
* Brigade Hotel Ventures Ltd. (BHVL), Promoted by Brigade Enterprises Ltd., a leading hotel owner and developer in South India, offering upscale hospitality experiences operated by leading global hospitality brands, is coming up with an IPO to raise around Rs. 759.60cr, which opens on 24th Jul and closes on 28th Jul, 2025. The price band is Rs. 85 - 90 per share.
* The company has raised Rs. 126.0cr in a pre-IPO placement, issuing 1.4cr equity shares to 360 ONE Alternates Asset Management Ltd. at Rs. 90 each.
* This public issue is entirely fresh issue (Rs. 759.60cr). From the fresh issue net proceeds and the proceeds from the Pre-IPO Placement, the company will be utilizing Rs 413.69cr for Repayment/ prepayment, in full or in part, of certain outstanding borrowings availed by the company; Rs. 54.45cr for Repayment/ prepayment, in full or in part, of certain outstanding borrowings availed by Material Subsidiary, namely, SRP Prosperita Hotel Ventures Ltd.; Rs. 107.52cr for Payment of consideration for buying of Undivided Share of Land from the promoter, BEL. Residual proceeds will be used for pursuing inorganic growth through unidentified acquisitions and other strategic initiatives and general corporate purposes.
* Post-IPO, the P&PG and public shareholders will have 74.09% and 25.91% stake in the company, respectively.
Key competitive strengths:
* Strategically located award winning hotels with diversified offerings in the key cities primarily in South India
* Focus on asset management resulting in operating efficiencies
* Focus on environmental, social & governance (“ESG”)
* Strong parentage of Brigade group
* Well positioned to leverage industry tailwinds
* Experienced management team with domain expertise
Risk and concerns:
* Heavy reliance on Marriott-operated hotels
* Geographical revenue concentration in Bengaluru market
* Significant dependence on F&B revenue
* Exposure to seasonal and cyclical business fluctuations
* Competition
Below are the key highlights of the company:
* The travel and tourism sector’s contribution to India’s economy grew from Rs. 15.7tn in 2022 to an est. Rs. 21.2tn in 2024, with a forecast of Rs. 43.3tn by 2034 at a 7.4% CAGR. Foreign tourist arrivals (FTAs) are expected to exceed 30mn by 2037 and 100mn by 2047, while domestic visits are projected to reach 5bn by FY30.
* With growing household earnings and a median age of 28.1 years, the spend on tourism is projected to rise by 170% from USD 150bn spent in calendar year 2019 to USD 410bn in calendar year 2030.
* Incorporated on 24th Aug. 2016, BHVL is an owner and developer of chain-affiliated hotels in key cities in India primarily across South India (comprising the states of Kerala, Andhra Pradesh, Tamil Nadu, Karnataka, Telangana, and the Union territories), operated by global marquee hospitality companies such as Marriott, Accor and InterContinental Hotels Group and are in the upper upscale, upscale, upper-midscale, and midscale segments.
* Promoted by Brigade Enterprises Ltd (BEL), which entered the hospitality sector in 2004, the company benefits from BEL’s strong brand reputation, real estate expertise, and corporate relationships to develop high-quality, cost-efficient hotels in strategic, high-growth locations, often as part of integrated mixed-use developments.
* As of FY25, it has a portfolio of nine operating hotels across Bengaluru, Chennai, Kochi, Mysuru and the GIFT City (Gujarat) with 1,604 keys and average occupancy of 76.76%.
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