International Finance Corporation plans to make a debt investment of up to Rs 375 crore (about $50 million) in Chalet Hotels Ltd, a K Raheja Corp group company that operates Marriott hotels in India.
Mumbai-listed Chalet Hotels will use the senior loan to complete construction of a commercial building in Bengaluru, refurbish a hotel in Mumbai and for general liquidity needs at existing hotels, IFC said.
The loan will help Chalet Hotels to meet its planned capital expenditure of $109 million in 2021-22 and 2022-23 to develop two commercial properties, repurpose existing retail space to office space, and refurbish existing hotels.
The loan comes at a time when the hospitality sector worldwide has been hit hard by the Covid-19 pandemic. IFC said its loan will provide flexible and long-term financing to the company at a time when commercial lending to the tourism sector has almost come to a standstill. The financing is structured to accommodate the expected prolonged recovery of the tourism sector post-Covid, IFC said.
IFC, the World Bank’s private-sector investment arm, is one of the most active private investors in India. It makes direct debt and equity investments in companies. It also acts as a limited partner to private equity and venture capital funds.
The company’s portfolio comprises seven high-end hotels, including a serviced apartment project, with a total of 2,554 keys, as well as two commercial and two retail assets across Mumbai, Bengaluru, Hyderabad and Pune.
The hotels are run under global brands JW Marriott, Westin, Marriott, Marriott Executive Apartments, Renaissance, Four Points by Sheraton, and Novotel, which are held by Marriott Group and the Accor Group. While the Novotel hotel in Pune is managed by Accor, all other hotels are run under management contracts or franchisee with Marriott International and its affiliates.
Chalet Hotels will use the IFC loan to renovate 300 rooms at Renaissance Mumbai Convention Centre Hotel, complete a commercial property at Marriott Complex in Whitefield, Bengaluru; and convert retail space to commercial space at JW Marriott Sahar complex in Mumbai.
The completion of the commercial asset in Bengaluru, involving around $25 million, will be considered a green loan as the property will be green-certified, IFC said.
Chalet Hotels’ parent, K Raheja Corp, owns a 71.65% stake in the company while domestic and foreign institutions hold 22.4%. The group was set up in 1996 and is managed by brothers Neel and Ravi Raheja, together with their father Chandru Raheja.