Lemon Tree Hotels (Lemon Tree) and Fleur Hotels (Fleur) today announced that their respective Boards of Directors have approved a Composite Scheme of Arrangement designed to simplify the group structure, enhance strategic focus, and unlock long-term value for shareholders. The Scheme is subject to customary regulatory and shareholder approvals.
The proposed reorganization will create two clearly differentiated and complementary platforms:
- Lemon Tree Hotels, as a pure-play, asset-light hotel management and brand platform; and
- Fleur Hotels, a current subsidiary of Lemon Tree, as a large-scale growth oriented hotel ownership platform with development capabilities and an attractive pipeline.
The Board of Directors further approved:
- Execution of a Share Purchase Agreement enabling Coastal Cedar Investment B.V., an affiliate of Warburg Pincus, to acquire the full 41.09% equity stake held by APG Strategic Real Estate Pool N.V. (APG) in Fleur; and
- Execution of a Shareholders' Agreement providing for a primary investment by Warburg Pincus of up to Rs 960 crore to be infused in tranches, to support the future growth of Fleur.
This investment marks a renewed partnership between Warburg Pincus and Lemon Tree, following Warburg Pincus' earlier investment in the company in 2006, which supported Lemon Tree's initial growth to become a prominent hotel brand and platform in India.
The Scheme, to be implemented through a NCLT-approved process, will reorganise the group's asset ownership and operating structure. The hotel assets currently owned by Lemon Tree will be transferred to Fleur, which will serve as the group's exclusive asset ownership and development company. Fleur will lead the group's all future hotel acquisitions and development, while Lemon Tree will transition to a fully asset-light model, focused on growing its hotel management, franchising and digital business. The Scheme will also result in a listing of Fleur's shares on NSE and BSE.