Says part of routine treasury operations.
ITC, the Kolkata-based tobacco-to-hotels major, has further raised its stake in the Nair family-promoted Hotel Leelaventure to a little more than 10 per cent, through a steady acquisition of shares from the open market.
The Rs 28,000-crore company has more than doubled its stake in the city-based hospitality major, a luxury-class hotels and resorts company, in less than a year.
ITC, along with its investment arm, Russell Credit Ltd (RCR), has hiked its stake to 10.02 per cent from a mere 4.17 per cent at the end of first quarter last year, according to the latest stock holding data available with the Bombay Stock Exchange (BSE). This is also a 265-percentage-point jump in stake holding for ITC since December when it held 7.37 per cent in Leela.
ITC started buying into Leela from late 2008. Promoters of Leela, meanwhile, have signalled no positive sign to the overtures of ITC, with senior officials even stating that the company’s board sees no synergy with ITC.
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Vivek Nair, vice-chairman and managing director of Hotel Leelaventure, said, “We already have a strategic alliance with the Kempinski Group. I see absolutely no reason why we should partner ITC, as there seems to be no synergy between the two companies.”
Earlier this year, reports said ITC was considering of having a larger equity presence in Leela through means available to it. It, however, later clarified that it was not interested in making a hostile bid for any company. Buying stakes in rival companies is, however, not new to ITC.
The company was reportedly in talks with East India Hotels (EIH), which owns the Oberoi brand, for exploring joint strategic operations. However, EIH had turned down the offer. It also resisted takeover attempts by Max India Chairman Analjit Singh.
Nakul Anand, divisional chief executive, ITC - Hotels Division, said in an e-mail reply: “The investment in Leela is part of our routine treasury operations and reflects our strategic intent to invest in businesses in which we have knowledge and expertise.”
The promoters’ stake in Leela, through holding company Leela Lace Holdings, could dip to 46 per cent from 53.32 per cent, if the foreign currency convertible bonds issued by the company get successfully converted into shares.
“We will then hike our stake through open market buyout of shares to 51 per cent in the first plan and then to 55 per cent over the next three years, as per the Sebi (Securities and Exchange Board of India) guidelines,” added Nair.
Nair also said his company was ready to meet the ITC management over buying the shares held by ITC and RCR. “We are open to buying the shares held by them (ITC) in our company. We are always willing to talk to them about this, however such a plan has not been discussed yet by the board.”
At the current market price of Hotel Leelaventure (Rs 45.45 a share on the BSE as on Monday), the promoters will have to fork out Rs 172 crore to buy 37,847,781 shares held by ITC and RCR.