Mumbai: Piramal Finance Limited (PFL), a subsidiary of Piramal Enterprises Limited, has forayed into the hospitality sector with multiple transactions done in quick succession.
The platform has committed Rs. 650 crores towards two marquee hotel assets in North India, followed by another Rs. 550 crores across another two assets in Bangalore and Pune, respectively.
PFL deployed Rs. 650 crores in Vatika Hotels Pvt Ltd., thereby providing a comprehensive financing solution to the Vatika Group to consolidate their existing lenders and increase their stake in the company by providing an exit to existing equity investors.
"The hospitality sector is uniquely positioned at the intersection of being both a real estate and a service oriented business in our opinion and through the combination of our Wholesale RE Funding platform, the Corporate Finance Group and our Capital Markets Group, we are able to service the needs of this industry across the entire capital stack, on behalf of both hotel owners as well as operators, on a holistic basis," said MD, Piramal Finance Limited, Khushru Jijina.
The investment was made against two established hotel assets being operated by Marriott.
The Westin Gurgaon is a 313 room key hotel strategically located in Gurgaon's central business district near IFFCO Chowk. The hotel has been operational since 2010 and is a highly successful business cum leisure destination with consistently high occupancy rates and an established F&B and banqueting business.
The Westin Resort Sohna is an established destination property developed as a weekend getaway located an hour away from IFFCO Chowk.
Similarly, in one of the largest fund raising deals within the hospitality sector in Bangalore, PFL has sanctioned Rs. 550 crores of structured debt towards the Advantage Raheja Group to support their growth plans and enable a refinance of existing lenders across two hospitality projects - The JW Marriott in Bangalore and the Crowne Plaza in Pune.
Both the properties enjoy the advantage of being in prime locations and expect excellent growth in terms of occupancy and revenue per available room.
"We are extremely pleased to have extended our partnership with the Piramal Group beyond residential and concluded a transaction against our hotel assets. We believe they bring a unique perspective along with an ability to understand the business extremely well and have provided us with unique insights as well as creative and customized solutions time and again to meet our growth capital needs," said Director, Vatika Group, Gaurav Bhalla.
"The team from Piramal was able to understand the industry dynamics and create a tailored solution that would not have otherwise been possible from a standard typical lender. I am extremely pleased with our association which transcends beyond the provision of capital towards engagement on the growth and revenue optimization strategy for both the hotel assets and we look forward to scaling this relationship further," said promoter, Advantage Raheja Group, Deepak Raheja.
Hospitality is an evergreen sector and quality assets at good locations have thrived across business cycles.
Hotels are long gestation projects and require long term financing partners who can provide tailor made solutions which can help the asset ride successfully across business cycles.
PFL has always followed a partnership approach and will follow similar approach with respect to investments in hospitality with the ability to participate across the entire capital stack, be it senior debt opportunities, mezzanine funding, last mile funding towards completion and acquisition financing opportunities in the sector.