GVK Group is in talks with Fairfax Holdings to sell its around 50% stake in TAJGVK Hotels and Resorts, a luxury hotel chain business.
TAJGVK Hotels and Resorts is a joint venture between GVK Group and Indian Hotels Company of Tata Group.
Go deeper with GlobalData
As on 31 March, GVK Group promoters had 49.47% stake while the Indian Hotels Company owned 25.52% interest in the TAJGVK firm.
Fairfax has had several rounds of negotiations with the Hyderabad-based infrastructure conglomerate GVK Group, exclusively reported Economic Times, which cited people familiar with the matter.
Recently, Indian-born Canadian billionaire Prem Watsa’s Fairfax acquired GVK’s stake in Bangalore airport.
Until this March, GVK had a net debt of Rs114.58bn ($1.67bn). It is looking at ways to sell its non-core businesses to improve its financial health.
One of the sources told the publication: “They have to reduce their debt problem.
“In addition, they need to raise fresh capital for the Navi Mumbai airport project. So, the company has identified a few non-core businesses and this hotel business is one among them.”
GVK’s stake in TAJGVK is valued at around Rs 7bn ($101m).
Set up in 2010, TAJGVK currently has seven five-star properties, which comprise four in Hyderabad, and one each in Chandigarh, Mumbai and Chennai.
In Mumbai, TAJGVK operates Taj Santacruz hotel near the airport.
Hotel consulting firm Prognosis Global Consulting managing partner Siddharth Thaker told the publication: “Favourable occupancy and ARR trends in Hyderabad, Mumbai and Chennai will provide the necessary impetus for growth in terms of topline, profitability and margins with the Taj Santacruz leading the growth momentum for the company.”
