In one of the biggest private equity (PE) deals in the hospitality space in recent years, The Xander Group has invested $110 million (Rs 520 crore) in the hospitality division of Pune-based Panchshil Realty, said a person involved in the deal.
Panchshil is developing seven hotels in the country under the Marriott brand of the US.
The investment was done through a 'float deal', wherein Xander will get stakes in the projects as and when they get up and running, said the person. The deal was signed today.
Panchshil would use the funds to develop 2,500 hotels in the next four years and has planned an public issue after that, the person said. Xander is expected to exit after the plans are put through.
Xander is expected to get an internal rate of return (IRR) of 20-25 from the investment. When asked, Atul Chordia, chairman of Panchshil, declined to comment on the deal.
In 2007, Xander and Tata's retailing arm, Trent, joined to float a real estate fund to invest in retail projects. Xander has also invested in the commercial property project of the Maker group and Mukesh Ambani confidante Anand Jain in Mumbai’s Bandra Kurla Complex.
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Panchshil is setting up a 450-room JW Marriott in Pune, a 400-room Courtyard of Marriott and a Fairfield Inn (service apartments) of Marriott, both at Mundra port in Gujarat, and a 150-room Courtyard by Marriott in Pune’s Hinjewadi.
Panchshil already has investments by global investors such as Morgan Stanley, Merrill Lynch and Ireo in its projects.