Ansals to Float Overseas Fund for Hospitality Project

Ansal Properties & Infrastructure Ltd (Ansal API) plans to raise around Rs1,230 crore by floating a hospitality fund in an overseas market to part fund its foray into the hospitality sector.

The fund is likely to be listed in the US or Singapore, Sushil Ansal, chairman, Ansal API, said.

“It will be a fund exclusively for the hospitality sector,” Ansal added.

APIL is entering the hospitality market by floating a special purpose vehicle (SPV) with Ambience Hospitality Management Ltd, whose managing director Vipin Luthra is Ansal’s son-in-law.

Ansal API will hold 80% equity in the proposed SPV and the balance will be held by Ambience Hospitality. The SPV plans to set up 30 hotels over the next 10 years at an investment of Rs2,000 crore.

The hotels will be spread across North India, in tier-II cities such as Amritsar and Ludhiana and in suburbs of large cities such as Delhi.

The projects will include business and leisure hotels, properties on Ansal’s golf resorts, and heritage property.

While the SPV will own and manage the heritage property and golf resorts under its own brand, it is in talks with multiple international hotel chains for possible management and branding tie-ups for the business and leisure hotels.

Last year, Ansal API’s rival DLF Ltd announced a joint venture with Hilton Hotels Corp. that hopes to build 75 hotels in India carrying various Hilton brands.

Luthra declined to specify when Ansal’s joint venture with Ambience expects a return on its Rs2,000 crore investment.

He said that depending on its type, a hotel could recoup development costs in five to 10 years.

The SPV has already acquired land for 17 properties, primarily from Ansal API’s land bank, and is in advanced stages of negotiation to buy three more plots.

Using Ansal API’s land will limit the share of land costs to Rs500 crore, 25% of total development costs, said Luthra.