Prestige Estates Projects Ltd. intends to list its hospitality business on the market to expand the vertical without accruing too much debt.
The board has given consent to an initial public offer for the hospitality business and the team is working on it, Chairman and Managing Director Irfan Razack told NDTV Profit.
In March, NDTV Profit reported that Prestige would likely sign a Rs 4,250-crore deal with Marriott Inc. to develop six properties. These assets, with 801 keys between them, will come up across western and southern India, including locations such as Bengaluru and Goa.
"I'd rather share that (equity) pie than have that problem of debt on your head," said Razack.
The company should be able to pull off this maiden share sale by the end of the current calendar year, Razack said. The size of the offer is being finalised, he added.
Parent Prestige Estates will be the major shareholder in the hospitality arm once it lists, said the chairman. The business size will include the existing inventory as well as the capacity from upcoming projects.
Once stabilised, the hospitality segment can generate revenue of Rs 1,800 crore for Prestige, as compared with the current Rs 900 crore, according to an April 3 note by Motilal Oswal.
Monetising the hospitality business can help Prestige knock off Rs 900 crore of gross debt from its books, the brokerage said. It can alleviate some of the cash flow stress associated with the Rs 1,700 balance capex in the hospitality segment, the note further said.
The hospitality business represented 10% of Prestige's total revenue of Rs 5,713.1 crore from April to December 2023. The inventory of 1,500 keys is expected to double over the next three to four years.
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