Hospitality fund on the prowl

India Hospitality Corporation, a special acquisition fund with $100 million corpus, is looking to acquire hotels in the three- to five-star category as well as serviced apartments, restaurants and timeshares.

It began its dealings on alternative investment mode on August 1 this year with 20 per cent premium.

"For every share, we will issue two warrants, thereby increasing our capital to $200 million," said Jason Ader, chief executive officer and chairman, IHC.

IHC would focus on acquiring businesses in fast-growing cities and top tourist destinations in the country. The first such acquisition would take almost a year.

Ader said IHC's endeavour would be to deliver superior risk-adjusted returns to its shareholders. However, the fund would not get involved in greenfield projects.

Foreign direct investment in domestic hotel and restaurant industry is at a lowly one per cent of total inflows. This despite being one of the fast growing sectors, said Ader. He said this, the growing middle class and increasing domestic travel were the reason for IHC's investment in this sector.

Ader was earlier research analyst covering companies in the gaming, lodging and leisure industries at Bear Stearns & Co.

He served as the president of Hayground Cove Asset Management, which has $1.46 billion under its management. Hero Honda's Pawan Munjal will be a director on IHC's board.

Rajiv Talwar, at present the additional director general in the Union ministry of tourism, is a prospective director on the IHC board.