Warburg Pincus to buy 41% stake in Lemon Tree Hotels unit Fleur Hotels

Core Viewpoint - Lemon Tree Hotels is undergoing a strategic reorganization, including the acquisition of a 41.09% stake in its subsidiary Fleur Hotels by Warburg Pincus for Rs9.6bn ($106.4m), which will enable Lemon Tree to focus on an asset-light hotel management model [1][3]. Group 1: Acquisition Details - Warburg Pincus will invest Rs9.6bn ($106.4m) in multiple tranches to acquire a 41.09% stake in Fleur Hotels, with the transaction set to be executed by Coastal Cedar Investment [1]. - The acquisition is part of a broader strategic reorganization that will see Fleur Hotels listed as a separate entity, allowing Lemon Tree to concentrate on hotel management and branding [2]. Group 2: Strategic Reorganization - The reorganization aims to create two focused platforms: one asset-light business for hotel management and branding, and another dedicated to hotel ownership and development [7]. - Lemon Tree will transfer its current hotel assets to Fleur, which will manage all future hotel acquisitions and developments, shifting Lemon Tree to an asset-light model [4]. Group 3: Mergers and Shareholding Structure - Lemon Tree will merge its wholly owned subsidiaries, Carnation Hotels and Hamstede Living, into itself, while four other subsidiaries will merge with Fleur in exchange for shares [5]. - Upon completion of the demerger, Lemon Tree shareholders will hold 32.96% of Fleur, with Lemon Tree directly owning 41.03% and Warburg Pincus holding 26.01% [6]. Group 4: Future Listing - Fleur is expected to be listed as a separate entity on Indian stock exchanges within 12 to 15 months following necessary approvals [7].