DRMumbai: The Economic Times reported that GVK Group is in exploratory talks with Indian-born Canadian billionaire Prem Watsa’s Fairfax Holdings to sell its nearly 50 per cent stake in luxury hotel chain business TAJGVK Hotels and Resorts, a joint venture with Tata Group’s Indian Hotels Company.
Fairfax, which recently bought out GVK’s stake in Bengaluru Airport, has had multiple rounds of talks with the Hyderabad-based infrastructure conglomerate.
GVK, which has a net debt of Rs.11,458 crore as on March 31, is exploring ways to sell its non-core businesses to strengthen its balancesheet, sources said. “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.”
Formed in 2010, TAJGVK now has seven five-star properties across the country, including four in Hyderabad, and one each in Chennai, Chandigarh and Mumbai where it operates Taj Santacruz, near the airport.
Both the promoters hold 25.52 per cent stake each in the company, with some individuals from GVK Group owning an additional 23.9 per cent.
Siddharth Thaker, Managing Partner at hotel consulting firm Prognosis Global Consulting, said, “TAJGVK will witness significant improvement in its return ratios and valuations if the company can successfully manage its repayment of debt and bring down its debt-equity ratio from the 0.6 per cent currently.
“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.”
