• Schloss Bangalore, owner of 'The Leela' hotel chain, is filing for a $599M IPO, capitalizing on the thriving Indian stock market.
• The funds raised will be used to repay debt and expand the hotel chain, with eight more hotels planned by 2028.
• The company's financial performance has improved significantly, with annual losses narrowing and Revenue per Available Room rising.
• With the Indian hospitality market projected to grow, Schloss Bangalore's IPO is a strategic move to capitalize on this growth and deliver shareholder value.

Schloss Bangalore, the proprietor of the esteemed Indian luxury hotel chain 'The Leela', has recently announced its decision to file for an Initial Public Offering (IPO) worth a staggering 50 billion rupees, equivalent to $599 million. This strategic move is aimed at capitalizing on the thriving Indian stock market, which is currently experiencing record highs. The Indian stock market has been performing exceptionally well, trailing only behind Wall Street's Nasdaq and S&P 500 as the top-performing indexes this year. This has led to a surge of Indian companies, including Schloss Bangalore, rushing to go public.

As of mid-September, approximately 235 companies have made their debut on the stock market, raising more than $8.6 billion. This figure surpasses the total amount raised last year, according to data from the London Stock Exchange Group (LSEG). In this IPO, Schloss Bangalore is issuing fresh shares worth 30 billion rupees. In addition, Project Ballet Bangalore Holdings (DIFC), an affiliate of Brookfield Asset Management, is selling shares worth 20 billion rupees.

Expanding Portfolio and Repaying Debt

The funds raised from this fresh issue will be utilized by Schloss Bangalore to repay its debt, thereby strengthening its financial position. Schloss Bangalore currently operates 12 luxury hotels across India and has ambitious plans to expand its portfolio by adding eight more hotels by 2028. The company's decision to go public has been influenced by the sustained demand for travel and the successful listings of other hotel firms such as Samhi Hotels and Juniper Hotels.

These factors have significantly boosted investor confidence in the hospitality sector. Kranthi Bathini of WealthMills Securities commented on the current market scenario, stating, The rebound in tourism after the pandemic, especially corporate travel, and an exuberant primary market gives hotel firms an excellent opportunity to take their businesses public.

Financial Performance and Market Projections

Schloss Bangalore has demonstrated a significant improvement in its financial performance over the past year. The company's consolidated annual losses have narrowed down to 21.3 million rupees in the fiscal year ending March 2024, from a substantial 616.8 million rupees a year ago. Furthermore, the Revenue per Available Room (RevPAR), a crucial metric for hotel owners and operators, rose nearly 23% on-year to 9,592 rupees in the fiscal year ending March 2024.

The Indian hospitality market is projected to grow from $24.6 billion in 2024 to $31 billion by 2029. This growth projection further validates Schloss Bangalore's decision to go public and expand its operations. The IPO is being managed by a consortium of leading financial institutions, including Morgan Stanley, BofA Securities, JPMorgan, and Citi. These institutions bring a wealth of experience and expertise to the table, ensuring a smooth and successful IPO process.

Historically, the hospitality sector has been a lucrative investment avenue, especially in emerging markets like India. The successful IPO of Lemon Tree Hotels in 2018, which was oversubscribed 1.19 times, is a testament to this fact. The company raised Rs 1,038.68 crore at the upper end of the price band. The positive response from investors towards Lemon Tree's IPO reflects the potential and profitability of the hospitality sector in India.