WestBridge picks up 10% in Royal Orchid Hotels

WestBridge Capital Partners has picked up a 10 per cent stake in the Bangalore-based hotel group 'Royal Orchid Hotels' by investing Rs 25 crore.

Announcing this on Tuesday, C K Baljee, chairman and managing director of Royal Orchid Hotels, said "with many financing opportunities on the table, we chose to take the funding from WestBridge as they are focused and aligned with our business objectives."

"Through this investment, we plan to grow our presence in India rapidly," he added. Hotels are being constructed in Hyderabad, Pune and Dominion Club is being renovated in Bangalore.

"As for the long term, we are looking at entering other cities like Chennai, Delhi and Mumbai by 2008. For this we are presently holding negotiations," he said.

The company hopes to raise Rs 100 crore through an initial public offering and has appointed merchant bankers ICICI Securities and SBI Capital Markets and is likely to file a prospectus with Sebi shortly.

K P Balaraj, managing director at WestBridge said, "We identified Royal Orchid Hotels as a high growth company, with a strong management team in an emerging market. This makes it a very attractive investment."

"Royal Orchid is one of the leaders in the Bangalore hotel market and is one of the most profitable companies in the hotel industry. We look forward to working closely with the company as they execute their vision to build Royal Orchid into one of the top five hotel brands in India," he added.

The hotel and tourism sector in India is experiencing significant growth driven by increased business and tourism, and the Bangalore hotel market remains one of the best performing hotel markets in India and the region, he further added.

According to Baljee, by 2008 the group plans to have six hotels in the 5-star category, 14 hotels in the 4-star and 20 budget hotels. It is open to expansion through joint ventures, management contracts, leasing or setting up of its own properties.

The Royal Orchid Hotels has clocked 40 per cent growth in first six months of this financial year (2005-06), a revenue of Rs 58.2 crore and profits of Rs 13 crore for 2004-05, and revenues of Rs 35.90 crore and profits of Rs 4 crore in 2003-04.