Lemon Tree to turn debt-free, Fleur listing next after Warburg deal: Patanjali Keswani

Lemon Tree Hotels has approved a business reorganisation and a fresh investment by private equity firm Warburg Pincus in its subsidiary, Fleur Hotels. Warburg will acquire APG’s 41.09% stake in Fleur and also invest up to ₹960 crore as primary capital to support future growth. After regulatory approvals, Fleur will be listed as a separate company on Indian stock exchanges.Patanjali G Keswani, Chairman and Managing Director of Lemon Tree Hotels, said around 80% of the group’s current debt of about ₹1,600 crore sits at Fleur. After repayments over the next year, Fleur’s gross debt could be around ₹1,300 crore, while Lemon Tree Hotels would become debt-free and generate cash from management fees and third-party hotel operations.

He said the reported ₹900–960 crore figure (from the deal) refers to new capital being infused into Fleur.“That is the primary capital,” he said, adding that the price paid by Warburg to APG was part of a shareholder transaction and not something he would comment on.

Keswani said the investment will be made in phases over the next 12 to 15 months, ahead of Fleur’s listing.

“The dilution will not be very significant. We will still be the largest shareholders,” he said.

He added that Fleur generates free cash flow of a few hundred crore rupees and, together with Warburg’s capital, will have around ₹1,500–1,700 crore of equity available. Including debt, the company could deploy about ₹3,000–3,500 crore for expansion in the coming year, depending on returns and acquisition opportunities.
Keswani said Fleur is adding around 700–800 rooms through projects in Nehru Place, Shillong and Shimla, and is in discussions to acquire about 2,500 more rooms. This could increase its size to around 6,000 rooms.Also Read | Lemon Tree share price surges over 4% after this CNBC-TV18 Exclusive

He said investors should value the company based on earnings and growth plans rather than one private transaction.

“You can value Fleur based on its current earnings before interest, taxes, depreciation, and amortisation (EBITDA) and what it will become,” he said.

He added that hotel companies in India typically trade at 15–25 times forward EBITDA, reflecting future growth from new projects.

After the restructuring, Warburg will own about 26% of Fleur, while Lemon Tree Hotels will hold around 41%. Existing Lemon Tree shareholders will directly hold about 33% of Fleur through the demerger.

Keswani said he would receive about 7% direct ownership in Fleur as a shareholder of Lemon Tree, in addition to indirect exposure through the parent company.

Lemon Tree Hotels currently has a market capitalisation of about ₹12,054 crore, and its shares have risen more than 11% over the past year.

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