Hotel Management Network

ITC hotels business demerger draws mixed views from advisory companies

IiAS has recommended shareholders to vote against the move while SES and InGovern are in favour of proposed demerger.

Indian conglomerate company ITC’s proposed demerger and separate listing of its hotels business has reportedly elicited mixed views from three proxy advisory companies.

Institutional Investor Advisory Services (IiAS) has recommended shareholders vote against the move while Stakeholders Empowerment Services (SES) and InGovern Research Services are in favour of the demerger.

Financial Express (FE) cited a note from IiAS to its shareholders, which unveiled IiAS’ concerns that despite the demerger, ITC will retain a 40% stake in the hotels business, along with its existing 13.69% and 7.58% holdings in EIH and HLV, respectively.

This suggests that shareholders will not be able to fully exit the hotel sector.

IiAS also noted that ITC might continue to provide capital support to the hotel business as a promoter.

The board has not clarified its long-term intentions for the 40% holding in the hotel business, the note said.

On the other hand, SES has no issues with the valuations of ITC Hotels and InGovern has endorsed the demerger, highlighting the maturity of the hotel business and its readiness to operate independently.

They believe the move will unlock value and allow the business to manage its own capital and growth trajectory.

Last year, ITC's board approved the demerger, which is expected to be finalised within the calendar year.

The National Company Law Tribunal recently directed ITC to seek shareholder approval on 6 June.

According to the proposed demerger transaction, shareholders are set to receive one share in the hotel business for every ten shares of ITC held, with no cash consideration expected to be paid.

ITC will retain a 40% stake post-demerger while the remaining 60% will be held by the company’s shareholders concerning their ownership in the parent entity.

Separately, ITC's Hotel Group has launched a new Mementos by ITC Hotels property, spanning over eight acres and features 64 suites and villas in its first phase, in Jaipur, India, ETHospitalityWorld.com has reported.

This marks ITC’s second Mementos property in India, with the first opening in Udaipur in March last year.

The Jaipur location joins the group's managed portfolio, which includes 14 properties across Rajasthan, with more planned.