Ventive Hospitality IPO: Luxury Hotel Company’s Issue Opens on December 20

Ventive Hospitality IPO

Ventive Hospitality IPO: Luxury Hotel Company to Open Public Issue on December 20, Backed by Blackstone and Panchshil Realty

Ventive Hospitality, a prominent luxury hotel and resort operator, is all set to open its Initial Public Offering (IPO) on December 20, 2024.

The IPO, which will close on December 24, is aimed at raising ₹1,600 crore. The company, known for its high-end business and leisure properties, is owned and managed by some of the biggest names in real estate and private equity, including Blackstone and Panchshil Realty, who collectively own 80.90% of the business.

The announcement comes after Ventive filed its Red Herring Prospectus (RHP) with the Registrar of Companies on December 14, 2024.

This IPO is significant because it provides investors with an opportunity to tap into the booming Indian hospitality industry, especially the luxury hotel and resort segment, which is poised for substantial growth.

What makes the IPO more intriguing is the involvement of Blackstone, a global investment giant, and Panchshil Realty, a leading real estate developer, both of which bring significant financial and operational expertise to the table.

Key IPO Details

• IPO Opening Date: December 20, 2024
• IPO Closing Date: December 24, 2024
• Issue Size: ₹1,600 crore
• IPO Type: Fresh issue of shares (no offer-for-sale)
• Listing: Shares to be listed on BSE and NSE on December 30, 2024
• Anchor Investors: Bidding opens on December 19, 2024

The company will not be offering any offer-for-sale (OFS) in the IPO. Instead, all the shares offered will be newly issued shares.

This means that Ventive Hospitality will retain the proceeds from the IPO, unlike an offer-for-sale where the funds go to the existing shareholders.

Company Overview

Ventive Hospitality is one of the leading owners, developers, and asset managers of luxury and business hotels and resorts.

The company operates a diverse portfolio that includes both luxury resorts and business hotels, catering to a wide range of travelers from high-end leisure tourists to business professionals.

As of now, Ventive Hospitality has 11 fully operational properties spread across key tourist and business hubs in India and the Maldives.

The company’s properties include luxury resorts and high-end business hotels in prime locations, ensuring a constant influx of guests throughout the year. Additionally, two more hotels are currently under development, which will further expand the company’s footprint.

The company operates in a competitive market, but its unique positioning in the luxury and premium segment, as well as its focus on quality and service, sets it apart from other hotel chains.

It primarily targets high-net-worth individuals (HNWIs), business travelers, and international tourists, all of whom demand premium accommodations and experiences.

Financial Backing from Blackstone and Panchshil Realty

Ventive Hospitality benefits significantly from the financial backing and expertise of Blackstone, the world’s largest private equity firm, and Panchshil Realty, one of India’s leading real estate developers.

These investors hold an 80.90% stake in the company, ensuring strong management oversight and financial backing.

Their involvement is a testament to Ventive’s growth potential and the company’s capacity to deliver attractive returns to investors.

• Blackstone: A global investment powerhouse with a vast portfolio across hospitality, real estate, and private equity, Blackstone’s involvement provides credibility to Ventive’s IPO. Blackstone’s deep pockets and extensive experience in the hospitality sector position Ventive as a strong contender in the industry.
• Panchshil Realty: Known for its commercial and residential real estate projects, Panchshil Realty’s investment further strengthens Ventive’s capabilities, especially in terms of strategic development, asset management, and operational efficiency.

Use of IPO Proceeds

The company plans to use the bulk of the ₹1,600 crore raised from the IPO to reduce its existing debt. As of September 2024, Ventive Hospitality’s total debt stood at ₹3,609.5 crore.

The company aims to use ₹1,400 crore from the IPO proceeds to pay down a significant portion of this debt, which will help lower its interest burden and improve its financial stability.

The remaining funds will be allocated for general corporate purposes, including working capital requirements and potential business expansion.

IPO Allocation Breakdown

• 75% of the IPO is reserved for Qualified Institutional Buyers (QIBs): These investors are typically large institutional investors such as mutual funds, insurance companies, and pension funds. QIBs are expected to play a major role in the offering due to their larger investment capacity and appetite for stable, long-term returns.
• 10% will be set aside for Retail Investors: These shares will be available for individual investors who wish to participate in the IPO. This is an excellent opportunity for retail investors to own a stake in a high-growth company in the luxury hospitality sector.
• 15% will be allocated to Non-Institutional Investors (NIIs): This category includes high-net-worth individuals and non-institutional entities who are willing to invest a larger amount in the IPO.

Additionally, shares worth ₹1 crore are reserved for employees of Ventive Hospitality, providing them with an opportunity to participate in the company’s growth and future success.

Financial Performance

Ventive Hospitality’s financial performance has been somewhat volatile in recent years. The company posted a net loss of ₹66.7 crore for FY 2023-24, a significant decline from the net profit of ₹15.7 crore reported in FY 2022-23.

Despite this, the company’s revenue for FY 2024 grew by 8.4%, reaching ₹1,842 crore, up from ₹1,699.4 crore in the previous year.

In the first half of FY 2025 (April-September), Ventive Hospitality reported revenue of ₹846.4 crore, but incurred a loss of ₹137.8 crore.

While this might raise some concerns, it’s important to note that the hospitality sector is cyclical, with seasonal fluctuations affecting performance.

Ventive’s focus on reducing debt and improving operational efficiency will be crucial in achieving long-term profitability.

Competitive Landscape

Ventive Hospitality competes with a range of other hotel chains in India, including publicly listed companies like Chalet Hotels, Samhi Hotels, Juniper Hotels, Indian Hotels Company, East India Hotels (EIH), Lemon Tree Hotels, and APJ Surendra Park Hotels.

However, Ventive stands out due to its premium positioning, strategic locations, and focus on high-end clientele.

The growing demand for luxury and business hotels in both urban and tourist destinations in India and the Maldives offers a strong growth opportunity for the company in the coming years.

Final Remarks

The Ventive Hospitality IPO presents a compelling investment opportunity for those interested in the luxury hotel sector.

The company’s strong backing from Blackstone and Panchshil Realty, its solid property portfolio, and strategic focus on reducing debt make it an attractive proposition.

However, prospective investors should consider the company’s financial performance and the inherent risks of the hospitality sector, which can be subject to economic cycles and seasonality.

With the IPO scheduled to open on December 20, 2024, and a listing on BSE and NSE expected on December 30, 2024, this IPO is one to watch closely, especially for those looking to invest in the growing Indian hospitality market.