Brookfield buy would help bail out India's Hotel Leelaventure Ltd.

The Leela Goa is one of Hotel Leelaventure's assets in India that may be sold to Canada's Brookfield Asset Management. Photo credit: Hotel Leelaventure Ltd.

Canada’s Brookfield Asset Management reportedly is close to buying at least four of five hotels owned by debt-ridden Hotel Leelaventure Ltd.—as well as a land parcel—for an estimated ₹4,500 crore. 

The deal, which is expected to close early next year, will mark Brookfield’s entry into India’s hospitality sector following the company's investments in other industries throughout the country. It also will give a major boost to Hotel Leelaventure Ltd., which had a debt of more than ₹3,000 crore as of September—significantly better than the ₹5,000 it owed three years ago.

Hotel Leelaventure, controlled by Mumbai’s Nair family, currently owns five hotels with more than 1,400 rooms in New Delhi, Bengaluru, Chennai, Mumbai and Udaipur. The company has been looking to offload assets for years to pay down some of its debt. After the failure of its corporate debt-restructuring plan in 2014, the Mumbai-based hospitality company transferred loans from 14 creditors to asset-restructuring firm JM Financial ARC (JMARC). In September 2017, it allotted more than 160 million shares worth about ₹275 crore to JMARC on conversion of debt to equity. JMARC owns 26 percent of Hotel Leelaventure. 

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The bulk of the proceeds from the transaction would be used to repay those 14 lenders, an anonymous source told LiveMint. “To be able to find a big investor would be a big news for the Indian hospitality industry, which has been starving for a good transaction for a long time,” said Gulam Zia, national director at property consultancy firm Knight Frank India. “Leela has been a great brand and what has been troubling them is lack of capital. If capital infusion happens, then it (Leela hotels) can be a turnaround.”