Kotak Realty Fund invests over Rs 1,100 crore in The LaLiT's Bharat Hotels

Kotak Realty Fund, a private equity asset manager focused on property investments, has recently made a major investment in hospitality company Bharat Hotels. This marks the fund's first investment in the hospitality sector in over 14 years, with their previous investment being in the parent company of Lemon Tree Hotels back in 2007-08. The investment, which totals over INR 1,100 crore, was made through debt with a five-year tenure and will be used to repay existing lenders, including public and private sector banks.

This transaction has brought Kotak Realty Fund's total investments in FY23 to a record high of over INR 5,500 crore, surpassing their previous best for any fiscal year. The investment was made through the fund's 13th real estate fund, which recently achieved its first closure with a $500 million commitment from the Abu Dhabi Investment Authority. This new fund, with a $1 billion platform, targets opportunistic real estate investments across key cities in India and is domiciled in GIFT City in Gujarat.

Kotak Investment Advisors, the alternative assets management and investment advisory business of Kotak Mahindra Group, has raised, managed, or advised more than $3.3 billion under its real estate fund series. Kotak Realty Fund has raised 13 funds since 2005 and invested in 73 projects and companies across various segments, including commercial office, residential, retail, industrial, and hospitality. The fund has deployed capital worth over INR 7,830 crore and has realized over INR 8,050 crore, including complete exits across 53 investments.

Bharat Hotels, the recipient of this investment, has a portfolio of 12 luxury hotels, palaces and resorts, and 2 mid-market segment hotels under the brand name The LaLiT. These hotels and resorts are located in prime locations in cities like Delhi, Udaipur, Mumbai, Bengaluru, Jaipur, Goa, and Srinagar and offer a total of 2,261 rooms. The company's debt in 2019-20 was INR 1,266 crore and its debt coverage may have been impacted by the Covid-19 pandemic. Bharat Hotels had revenues of INR 729.2 crore in FY20.

The hospitality sector in India is recovering from the impact of the pandemic due to pent-up demand and the easing of restrictions following the third wave of Covid cases. Aided by events and weddings, the sector saw growth in average room rates last year and has also benefited from the return of corporate travel as companies and key sectors have resumed work from offices and project sites. This has led to significant recovery opportunities for the hospitality sector and has improved business confidence in the luxury hospitality segment.

As reported by Economic Times in August 2021, Bharat Hotels was looking to induct strategic investors through a stake sale, with the investment aimed at providing funds for property renovation and closing the revenue per available room (RevPAR) gap with industry peers. The investment opportunity was also expected to provide growth acquisition opportunities through buyouts and management contracts with Bharat Hotels.

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Kotak Realty Fund invests over Rs 1,100 crore in The LaLiT's Bharat Hotels

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