Apeejay Surrendra Park Hotels sets price band at ₹147-155; IPO to open on Feb 5

Apeejay Surrendra Park Hotels, a subsidiary of the Apeejay Surrendra Group, has set a price band at ₹147-155 per share for its upcoming initial public offering (IPO), which will open for subscription on February 5 and close on February 7. The anchor book of the IPO will open for a day on February 2, while the allotment of shares is expected to be finalised on February 8. The tentative date for listing of shares of Park Hotels on the BSE and NSE is February 12, 2024.

Park Hotels, the 8th largest hotel chain in terms of asset ownership in India, looks to raise ₹930 crore via the IPO route, which is a mixture of fresh issuance of equity shares worth ₹600 crore and an offer for sale (OFS) of shares worth ₹320 crore by promoters and existing shareholders.

The company has trimmed its IPO size by ₹120 crore as compared to ₹1,050 crore mentioned in its preliminary papers filed with the SEBI on August 19, 2023. The IPO got approval from the capital markets regulator on December 7, 2023. 

The IPO of Park Hotels, which owns and operates hotels under the "The Park" brand, is going to be the fourth largest in the hotels & resorts sector. Chalet Hotels’ ₹1,641 crore offering in February 2019 is the biggest in this space so far, followed by SAMHI Hotels’ ₹1,370 crore IPO in September 2019, and Lemon Tree Hotels’ ₹1,039 crore issue in April 2018.

As per the revised document filed with capital market regulator SEBI, the Kolkata-headquartered company has reserved 75% of the issue for qualified institutional buyers (QIB), 15% for high net-worth individuals, and 10% for retail investors.

The lot size for the Park Hotels IPO is 96 shares and in multiples after that, which means the minimum application amount for retail investors would be ₹14,112. The maximum investment amount for retail investors will be ₹193,440 for 13 lots, or 1,248 shares.

Apeejay Surrendra Trust; Karan Paul, the chairman of the Apeejay Surrendra Group; Priya Paul, the chairperson of Park Hotels, and Great Eastern Stores are promoters of the company, collectively holding 94.18% ownership in the company (pre-IPO). The remaining 5.82 percent shares are held by the public shareholders, including RECP IV Park Hotel Investors with a 5.53% stake.

Under the OFS, promoters Apeejay will be offloading shares worth ₹296 crore, while RECP IV Park Hotel Investors and RECP IV Park Hotel Co-Investors will be selling shares worth ₹23 crore and ₹1 crore, respectively.

Out of the fresh equity issuance of ₹600 crore, the company intends to use ₹550 crore for repaying debts, while the remaining capital will be used to meet general corporate purposes. As of December 31, 2023, the total outstanding consolidated debt of the company stood at ₹582.28 crore.

Apeejay Surrendra Park Hotels is the 8th largest hotel chain amongst hotel chains with asset ownership in India, as per Horwath HTL report. It runs luxury boutique hotels in India under its brand, “THE PARK”, extending it further through “THE PARK Collection” and in upper-midscale categories with its brands “Zone by The Park” and “Zone Connect by The Park”. They have also established a presence in the retail food and beverage industry through its retail brand ‘Flurys’.

The group categorises its hotel portfolio into two distinct categories based on brand classification – upscale, and upper mid-scale. “THE PARK” brand is positioned as an upscale brand with a luxury boutique offering, while “Zone by The Park” and “Zone Connect by The Park” brands are positioned at the upper midscale level, which is designed for the price-conscious and design conscious customers. While “THE PARK Collection” brand encompasses small luxury properties located at selected travel destinations targeted at the luxury hotel category, “Stop by Zone” is an economy motel brand.

These hotels are differentiated through design and art, events, and entertainment, providing unique, memorable, and immersive service experiences. Differentiation is also part of the “Zone by the Park” brand, which is being specially developed for India’s tier 2 and tier 3 cities through the use of modern design and local influences.

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