Upcoming IPO: Blackstone-Backed Ventive Hospitality Fixes Price Band For Issue; Check Key Dates & More

Blackstone and real estate major Panchshil Realty-backed Ventive Hospitality has set the price band for its upcoming Initial Public Offering (IPO) between Rs 610 and Rs 643 per equity share of the face value of Re 1. This public issue is slated to open for subscription on Friday, December 20, and will close on Tuesday, December 24, 2024. The company aims to raise funds to support its ongoing growth strategies, including debt repayment and expansion of its hospitality assets. The IPO's anchor investor allocation is set for Thursday, December 19, ahead of the offer opening.

Price Band and Valuation

The price band of Rs 610 to Rs 643 per share represents a multiple of 610 to 643 times the face value of the equity shares. The company's price-to-earnings (P/E) ratio for fiscal 2024 is estimated at 40.39 times at the upper end of the price band and 38.32 times at the lower end.

As per the Red Herring Prospectus (RHP), Ventive Hospitality's listed competitors, including Chalet Hotels, Samhi Hotels, Juniper Hotels, and others, are trading at varying P/E multiples. For example, Chalet Hotels has a P/E ratio of 66.04, Samhi Hotels has a much higher P/E of 244.86, and The Indian Hotels Company is at 87.89. The lower P/E of Ventive Hospitality suggests it could be an attractive proposition compared to some of its expensive counterparts.

IPO Lot Size & Investor Allocation

The Ventive Hospitality IPO offers a lot size of 23 equity shares, with the option to apply in multiples of 23 thereafter. A portion of the IPO has been reserved for qualified institutional buyers (QIBs), who will be allocated at least 75% of the total shares. Non-institutional investors (NIIs) will be allocated no more than 15%, while retail investors will be offered up to 10% of the shares. Additionally, an employee portion has been set aside for shares worth up to Rs 1 crore.

Use of IPO Proceeds

Ventive Hospitality intends to utilize the net proceeds from the IPO for several critical purposes, which include:
Debt Repayment: A portion of the funds will go toward the repayment or prepayment of certain borrowings, either partially or fully.
Interest Payment on Borrowings: The company also plans to use the proceeds to cover accrued interest on borrowings.
Investment in Step-Down Subsidiaries: The company aims to invest in its step-down subsidiaries, SS & L Beach Private Limited and Maldives Property Holdings Private Limited.
General Corporate Purposes: Any remaining funds will be used for general corporate purposes.

Financial Performance

Ventive Hospitality specializes in owning and managing hospitality assets, with a primary focus on luxury offerings targeting both business and leisure markets. The company operates a portfolio of hotels that are either managed or franchised by prominent global hotel chains, including Marriott, Hilton, Minor, and Atmosphere.

For the six months ending September 30, 2024, and for FY24, FY23, and FY22, the company's pro forma revenue from hotel operations accounted for the following percentages of their total income: 68.47%, 72.04%, 72.71%, and 68.53%, respectively. Ventive's revenue from hotel operations as a percentage of overall income for the same periods was 56.24%, 49.26%, 51.11%, and 38.37%.

Lead Managers and Registrar

The book-running lead managers for this IPO include JM Financial Limited, Axis Capital Limited, HSBC Securities & Capital Markets Pvt Ltd, ICICI Securities Limited, IIFL Securities Ltd, Kotak Mahindra Capital Company Limited, and SBI Capital Markets Limited. Kfin Technologies Limited serves as the registrar for the IPO.