Leela Hotels' ₹3,500 crore IPO now open: Should you invest?
What's the story
Schloss Bangalore Limited, the parent company of The Leela Palaces, Hotels & Resorts, has launched its initial public offering (IPO) today. The IPO seeks to raise ₹3,500 crore and will be open for bidding till Wednesday. It includes a fresh issue of ₹2,500 crore and an offer for sale (OFS) of ₹1,000 crore. The price band has been fixed at ₹413-435 per share. Investors can bid for a minimum of 34 shares and in multiples thereof.
Initial response
Schloss Bangalore's IPO witnesses modest initial subscription
The IPO of Schloss Bangalore Limited has received a lukewarm response so far. Within the first hour of its opening, the IPO was subscribed at 1%, with retail investors subscribing at 3%. Non-institutional investors (NIIs) have bid for 30,872 shares of the 1.27 crore shares reserved for them. Qualified institutional buyers (QIBs) are yet to tap the issue. At the time of writing, the shares were trading at a grey market premium of 3.6% or ₹16 in the unlisted market.
Anchor investment
Schloss Bangalore secures ₹1,575 crore from anchor investors
Before the public issue's launch, Schloss Bangalore raised ₹1,575 crore from 47 leading domestic and international anchor investors. This was done at the upper end of the price band at ₹435 per equity share. The company has set aside over 3.62 crore equity shares for these anchor investors including Goldman Sachs, Fidelity and Societe Generale among others.
Expert opinions
SBI Securities and Bajaj Broking weigh in on the IPO
SBI Securities has recommended subscribing to the IPO, citing the company's presence in the luxury sector as a high-growth opportunity. The firm plans to use proceeds from the IPO to repay its debt, which will lower its current debt-to-equity ratio of 1.1x and improve profitability. On the other hand, Bajaj Broking has advised caution due to current losses and high valuation compared with peers like Indian Hotels and EIH Limited.