Tata PE Buys 10% in Ginger Hotels

Wednesday, November 30, 2011

MUMBAI: Tata Capital’s private equity fund has acquired a 10% stake in Roots Corporation, which runs budget hotel chain Ginger. The stake-purchase in Ginger was completed by the $550 million Tata Opportunities Fund and it marks the one-year-old fund’s debut investment, said sources familiar with the matter.

Tata Opportunities Fund, spearheaded by Mukund Rajan, is a third party private equity fund in which several global institutions are investors. The deal had valued the loss- making Ginger Hotels at around Rs 1,000 crore, sources added. Tata Opportunities Fund is the largest ticket-sized fund within Tata Capital’s private equity franchise that includes a healthcare fund and an innovation fund. It had a final close of $550 million in September this year. A final tranche of $100 million was raised during the last quarter.

Roots Corporation, an arm of Indian Hotels Company (Taj hotels) entered into budget hotels through the launch of Ginger in June 2004. The country’s first smart basics hotels concept was developed in association with renowned corporate strategy thinker C K Prahalad. Sources explained that Taj’s move to bring in a financial investor in Roots Corporation was to deleverage its balance sheet. The seven-year-old Ginger chain is yet to make money. It recorded a loss of Rs 8.8 crore on a turnover of Rs 78 crore in 2010-11.

Source: The Times of India (link opens in a new window)