Lemon Tree forms JV to expand beyond hotels

Lemon Tree Hotels' backers are set to sell between Rs1,000 and 2,000 crore in shares.
Lemon Tree Hotels is India's largest mid-price hotel chain. Photo credit: Lemon Tree Hotels

New Delhi-based Lemon Tree Hotels has formed a joint venture with an affiliate of Warburg Pincus, a global private-equity firm focused on growth investing, to develop a co-living platform. 

The JV marks Lemon Tree Hotels' entry into an adjacent business segment from traditional hospitality, and will focus on the development of rental-housing accommodations across major educational clusters and key office markets in India.

The Warburg Pincus affiliate and Lemon Tree Hotels will hold a 68-percent and a 30-percent stake, respectively, in the JV, with the remaining 2 percent to be held by Lemon Tree Chairman and Managing Director Patanjali Keswani. The JV partners will initially invest Rs 1500 crore in equity over a period of time followed by an additional infusion of Rs 1500 crore in equity at the option of the partners, to develop rental-housing projects. The JV's projects will include shared spaces like living rooms, gyms and cafeterias in order to provide its residents with full-service co-living accommodations.

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On a consolidated basis, Lemon Tree Hotels reported net profit of Rs 6.54 crore in September, compared with net loss of Rs 4.43 crore in September 2017. Net sales rose 15.35 percent of Rs 128.69 crore in September over September 2017.

Lemon Tree Hotels is India's largest mid-price hotel chain and third largest overall, on the basis of controlling interest in owned and leased rooms.

Just a year ago, Lemon Tree received approval to sell shares of its company in an initial public offering. The company went public in early 2018 and was listed on the National Stock Exchange of India last April.

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