Indian Hotels eyes $75m long-term finance

The board of the company has authorised a committee of directors, to examine and evaluate alternate fund raising methods. The funds could be raised through foreign debt instruments, and or issue of equities or warrants.

Senior Taj sources said: "These funds will be utilised to finance the various capital expenditure programs of the company. Since the instruments have an equity option, the impact on the debt equity structure will be minimised. However, this initiave is at an exploratory stage right now." The fund raising proposal is subject to regulatory approval, they said.

Indian Hotels, as part of its expansion strategy overseas, is looking at acquiring various properties at in the US, China, Russia and other south-east Asian countries.

It has also shown an interest in acquiring New York-based Intercontinental Hotel. The fund-raising plan is linked to its acquisition strategy as its last big overseas acquisition plan, of the Carlyle of New York, fell through due to last-minute funding problems.

Because of the cyclical nature of the hotels industry, it is also not possible to leverage future cash flows to fund takeovers.

Even within India, the Taj group is looking at a major expansion plan. In three years, it plans to increase the number of business hotels from 18 to 30, group sources had earlier told Business Standard.