Ventive IPO: Can This Hotel Chain Check In to Big Gains?

Ventive Hospitality to Utilize ₹1,400 Crore IPO Funds for Debt Reduction and Finance Cost Savings

Ventive IPO: Can This Hotel Chain Check In to Big Gains? Blackstone-backed Ventive Hospitality has launched its ₹1,600 crore Initial Public Offering (IPO) on December 20, with a price band of ₹610-643 per share. Of the total proceeds, ₹1,400 crore will be allocated to reduce the company’s debt, decreasing its net debt from ₹3,000 crore to ₹1,500 crore and reducing interest expenses by approximately ₹220 crore.

In an exclusive interview with CNBC-TV18, Asheesh Mohta, Managing Director and Head of Real Estate Acquisitions at Blackstone, emphasized the company’s strategic focus on deleveraging. “Post debt repayment, our annual finance costs will drop to around ₹220 crore, with an average interest rate of 9%. This improved capital structure will allow us to pursue both organic and inorganic growth opportunities,” he explained.

Expansion Plans

Ventive IPO: Can This Hotel Chain Check In to Big Gains? Ventive Hospitality, which currently operates 2,036 keys, plans to expand its portfolio to over 2,400 keys by FY28, primarily in the upper-upscale and luxury segments. The company manages 1,500 keys in India and 500 in the Maldives, catering to both business and leisure travelers. Ventive’s development pipeline includes 370 additional keys, which will be funded entirely through internal cash flows, avoiding any reliance on external debt.

The Pune-based hospitality firm is already cash-positive, generating ₹900 crore in EBITDA. It aims to strengthen its presence in key markets like Varanasi, Bangalore, and Pune, with notable projects such as a Marriott hotel in Varanasi, targeting the growing demand for spiritual tourism.

Long-Term Commitment

Ventive IPO: Can This Hotel Chain Check In to Big Gains? While Blackstone has a fund structure and plans to gradually divest, Mohta affirmed the firm’s confidence in Ventive’s long-term growth potential. Neither Blackstone nor its partner Panchshil is selling shares in this IPO, signaling their commitment to supporting the company’s expansion and capitalizing on the hospitality sector’s growth, both globally and in India.

Strategic Focus

Ventive IPO: Can This Hotel Chain Check In to Big Gains? Ventive’s portfolio strategy prioritizes the most profitable segments of the market. The company’s focus remains on delivering premium experiences for the aspiring Indian traveler and leveraging growth opportunities in high-demand markets. With a robust pipeline and reduced financial liabilities, Ventive is well-positioned to drive sustained growth in the hospitality industry.

Ventive Hospitality to Allocate ₹1,400 Crore IPO Funds for Debt Reduction and Lower Finance Costs

Ventive IPO: Can This Hotel Chain Check In to Big Gains? Blackstone-backed Ventive Hospitality launched its ₹1,600 crore Initial Public Offering (IPO) on December 20, offering shares within a price band of ₹610-643. The company plans to use ₹1,400 crore of the IPO proceeds to reduce its debt, bringing its net debt down from ₹3,000 crore to ₹1,500 crore and reducing interest costs by approximately ₹220 crore.

In an exclusive interview with CNBC-TV18, Asheesh Mohta, Managing Director and Head of Real Estate Acquisitions at Blackstone, explained that the company’s primary goal is to deleverage its balance sheet. He highlighted that post-debt reduction, Ventive’s finance costs would drop to around ₹220 crore with an average interest rate of about 9%. The company intends to leverage its improved capital structure to acquire assets and expand both organically and inorganically.

Expansion Plans

Ventive IPO: Can This Hotel Chain Check In to Big Gains? Ventive aims to increase its portfolio from 2,036 keys to over 2,400 keys by FY28. The Pune-based company is already cash-positive with ₹900 crore in EBITDA and focuses on the upper, upscale, and luxury hotel segments. The company owns 1,500 keys in India and 500 in the Maldives, catering to business and leisure travelers. Ventive’s development pipeline includes 370 keys, which will be financed entirely through internal funds, without relying on external debt.

Long-Term Commitment

Ventive IPO: Can This Hotel Chain Check In to Big Gains? While Blackstone plans to eventually reduce its stake, Mohta emphasized the firm’s long-term commitment to Ventive. Both Blackstone and its partner Panchshil are not selling any shares in the IPO, signaling their confidence in the company’s growth prospects in the hospitality sector. The company is focused on high-demand markets such as Varanasi, Bangalore, and Pune, with projects like a Marriott in Varanasi aimed at tapping into the growing spiritual tourism market.

Strategy for Profitability

Ventive IPO: Can This Hotel Chain Check In to Big Gains? Ventive’s strategy targets the upper segments of the market, focusing on business and leisure travelers in India and the Maldives. With a strong pipeline of developments and reduced financial burdens, Ventive is poised for continued expansion and growth in the hospitality industry.

Ventive Hospitality IPO: Key Details, Subscription Status, GMP, and Expert Opinions

The ₹1,600 crore Ventive Hospitality IPO opened for subscription on December 20 with a price band of ₹610 to ₹643 per share. The subscription window will close on December 24. The company, backed by Blackstone, raised ₹719.5 crore from anchor investors before the public issue. Some notable anchor investors include Quant Mutual Fund, SBI Life Insurance, Tata Absolute Return Fund, and others, who were allocated shares at ₹643 each.

Grey Market Premium (GMP) and Subscription Status:

• The last reported GMP was ₹66, suggesting an expected listing price of ₹709, a 10% premium over the upper price band of ₹643.
• As of 12:05 PM on the first day of subscription, the IPO had an overall subscription of 6%, with the retail portion subscribed to 28%. The NII portion was booked to 4%, and the employee portion had seen an 81% subscription. The QIB portion had not yet been subscribed.

Key IPO Details:

1. Price Band: ₹610-643 per share
2. Subscription Dates: December 20 to December 24, 2024
3. IPO Size: ₹1,600 crore through the issue of 2.49 crore shares (entirely a fresh issue)
4. Reservation: 75% for QIBs, 15% for non-institutional investors, and 10% for retail investors
5. Lot Size: Minimum investment of ₹14,789 for retail investors (23 shares)
6. Listing Date: Expected on December 30, 2024
7. Allotment Date: December 26, 2024

Business Overview:

Ventive IPO: Can This Hotel Chain Check In to Big Gains? Ventive Hospitality operates a portfolio of luxury hotels across India and the Maldives, partnering with global brands like Marriott, Hilton, and Atmosphere. For FY24, the company reported a revenue of ₹4,779.80 million, with a comprehensive income of ₹1,666.82 million. However, it posted a loss of ₹348.66 million in the first half of FY25 due to recent acquisitions.

IPO Review and Expert Opinions:

1. Canara Bank Securities has a neutral view, noting the company’s solid brand value but urging caution due to the high price-to-earnings ratio (PE of 90.3x). They highlighted strategic partnerships with global operators like Blackstone and JW Marriott and the company’s focus on hotel development, which could ensure higher returns. However, scalability in new markets remains a challenge.
2. Arihant Capital Markets recommends a long-term subscribe. They believe the debt reduction through IPO proceeds will improve profitability and help secure competitive financing for future expansion. Ventive’s growth plans in India, Sri Lanka, and Maldives strengthen its position in the rapidly growing luxury hospitality sector.
3. StoxBox’s Akriti Mehrotra views the company positively, noting its luxury properties, strong brand partnerships, and stable revenue streams from leased assets. Ventive’s expansion into key markets like Bengaluru and Sri Lanka is expected to drive growth.

Should You Apply?

• Pros: Ventive’s solid financial performance, premium location strategy, and significant brand partnerships position it well for growth in the expanding luxury hospitality market.
• Cons: The high valuation and dependence on third-party operators for a large portion of its properties might make it a risky bet for short-term investors.

Ventive IPO: Can This Hotel Chain Check In to Big Gains? Experts suggest that investors should consider the long-term growth potential, especially if they believe in the hospitality sector’s prospects in India and the Maldives. For those seeking a steady growth story with a focus on premium properties, the IPO could be an attractive option.