Prestige Estates board okays proposals to raise Rs 5,000 crore

Bengaluru: Prestige Estates Projects plans to raise Rs 5,000 crore from institutional investors to bolster its hospitality business.

On Friday, the board approved a proposal to raise the funds through a public sale of shares to institutional investors or other permissible modes, it said in a filing with BSE. The board also cleared another plan to monetise the hospitality business, and established a subcommittee to supervise the process.

The Bengaluru-based company may either consider creating a real estate investment trust - which could be the first hotel REIT in India - or pursue an initial public offering to monetise the hospitality business.

In April, ET was the first to report Prestige Estates' plan to monetise the business. "The firm is also currently evaluating to monetise its hospitality portfolio, which will lead to some value unlocking," Zaid Sadiq, executive director of hospitality at the Prestige Group had said. He could not be reached for comment.

According to various analyst reports, the move can also knock off Rs 900 crore of gross debt from its books and alleviate some of the cash flow stress associated with the capex plan in the hospitality segment.

Prestige Estate Projects plans to expand its hospitality portfolio by two-fold over the next 3-4 years, with a total investment of Rs 1,700 crore. It currently has 1,849 keys of hospitality assets across the country under several brands from the Hilton and Marriott portfolios.

The company has been hiving off businesses like office, retail and hospitality to make them self-sustainable and raise capital against them.

In April, the Prestige Group raised Rs 2,000 crore in a residential platform deal with the Abu Dhabi Investment Authority and Kotak AIF.