New Delhi: Lemon Tree Hotels Ltd on Friday said its board has approved a composite scheme of arrangement that will reorganise the group into two distinct platforms—an asset-light hotel management company and a hotel ownership and development entity—alongside a fresh investment by Warburg Pincus of up to ₹960 crore.
Under the approved plan, Fleur Hotels Ltd, currently a subsidiary of Lemon Tree, will become the group’s exclusive asset-owning and development arm, while Lemon Tree Hotels will transition into a pure-play, asset-light hospitality management and brand platform. The restructuring is subject to regulatory and shareholder approvals, including sanction by the National Company Law Tribunal (NCLT).
As part of the transaction, Coastal Cedar Investments BV, an affiliate of Warburg Pincus, will acquire APG Strategic Real Estate Pool NV’s entire 41.09% stake in Fleur Hotels. In addition, Warburg Pincus has committed to invest up to ₹960 crore of primary capital into Fleur in tranches to support future growth.
The scheme will involve the transfer of hotel assets currently owned by Lemon Tree to Fleur, positioning Fleur as a large-scale hotel ownership platform with a strong development pipeline. Lemon Tree, in turn, will focus on expanding its management, franchising and digital capabilities, both in India and overseas.
Following the reorganisation, Fleur’s owned portfolio is expected to expand from 3,993 keys across 24 hotels to 5,813 keys across 41 hotels, making it one of the largest hospitality asset owners in the country. Lemon Tree will continue to operate and manage these properties, in addition to its existing third-party managed and franchised hotels.
Post-transaction, Lemon Tree shareholders are expected to own 32.96% of Fleur, while Lemon Tree will directly hold 41.03%. Warburg Pincus will own 26.01%, excluding any dilution from the proposed primary investment. Fleur is slated to be listed separately on the NSE and BSE, with the entire process expected to be completed within 12–15 months.
“This scheme is intended to create a simplified, transparent and growth-oriented structure for both companies,” said Patanjali Govind Keswani, founder and executive chairman of Lemon Tree and Fleur Hotels, adding that the renewed partnership with Warburg Pincus comes at a time when India’s hospitality sector is entering a sustained growth phase.
Warburg Pincus managing director Anish Saraf said the firm was pleased to partner again with Lemon Tree to support the next phase of growth, citing favourable industry fundamentals and a clear strategic roadmap.
Morgan Stanley acted as the exclusive financial advisor to Lemon Tree on the proposed transaction.