Tata Sons to invest Rs1,077 cr to raise IHCL stake to 36.43%

Tata Sons Limited plans to invest Rs1,077 crore to acquire the entire 6.64 per cent stake held by the other promoter entities, comprising the Tata Trusts, in Indian Hotels Company Limited.

Tata Sons, through its filing on BSE, on Tuesday, said that promoter company, plans to buy 6.64-per cent stake from other promoter trust entities to hike its stake in the BSE-listed hospitality arm The Indian Hotels Co Ltd (IHCL) to 36.43 per cent.

IHCL owns and operates 98 hotels in 61 locations across the globe.

Tata Sons, the principal shareholder and promoter of various Tata Group companies, will acquire 78.9 million shares representing 6.64 per cent stake in IHCL, thereby taking its overall shareholding in the hospitality firm to 36.43 per cent.

Tata Sons will acquire additional shares from the open market anytime on or after 13 March 2018, as part of restructuring its investment portfolio. The shares will mainly be bought from three entities, viz, Sir Dorabji Tata Trust (up to 50,221,040 shares), Lady Tata Memorial Trust (up to 17,728,200 shares) and Sir Ratan Tata Trust (up to 11,023,220 shares).

According to a Tata Sons statement, the three entities are likely to completely exit their shareholding in IHCL post the completion of this share purchase exercise.

The shares will be acquired at or around the prevailing price on the date of the proposed acquisition. However, according to Tata Sons, the acquisition price will not be higher by more than 25 per cent of Rs136.36 per share.

According to Tata Sons, it arrived at the said price after taking into account the volume weighted average market price for a period of 60 trading days preceding the date of issuing the notice to the stock exchange. IHCL shares closed 0.30% down at Rs133.75 on Tuesday (6 March 2018) as compared to a previous close of Rs134.15 after reaching an intra-day high of Rs136.80 a piece.

IHCL's market capitalisation at the end of the trading session on Tuesday stood at Rs15,906.33 crore. The company operates hotels under 'Taj', 'Vivanta', 'Gateway' and 'Ginger' (through subsidiary Roots Corporation Ltd) brands.

In August 2017, under Tata sons chairman Natarajan Chandrasekaran, the IHCL board had brought on board Puneet Chhatwal as its new managing director and chief executive officer after Rakesh Sarna (a confidante of ousted Tata Sons chairman Cyrus Mistry) resigned from IHCL in May 2017.

Sarna had, in February 2017, decided to migrate all the 'Vivanta' and 'Gateway' branded hotels to a single brand, ie, 'Taj'. However, the decision was reversed a year later by Chhatwal with IHCL going back to its multi-brand approach to addressing the various consumer segments of the hospitality market.