No buyers have emerged to acquire embattled group Jaypee’s on-the-block hotel assets four months after an information memorandum was sent to select investors.
Jaypee had initially asked for Rs 2,500 crore and the price was later brought down to Rs 1,500 crore as per industry insiders.
“The Jaypee memorandum came to us like other investors but there is a huge difference between the potential bids and the asking price. They were asking for closer to Rs 1,400-1500 crore but the current set of investors are closer to committing Rs 700-800 crore. Nobody looks like a close contender and Jaypee is unlikely to come down with the price as they need to solve a problem unlike others. Their problem cannot be solved with Rs 1,000 crore,” said an investor familiar with the developments, while another industry insider added: “The valuation mismatch is pretty severe.
The valuation could potentially stretch to about Rs 1,100 crore but it will not go beyond that. They had started with Rs 2,500 crore initially.”
According to hoteliers, the memorandum announcing the sale of all hotels of the group was sent to the likes of SAMHI, Brookfield, Blackstone and others, but no buyers have come forward given the steep gap in asking price and valuations.
ET was the first to report on edition dated December 16 that troubled real estate developer Jaiprakash Associates was planning to sell all its five hospitality assets at an estimated asking price of Rs 2,500 crore and had put together an information memorandum titled ‘Project Pluto’ for a limited number of parties. ET had reviewed a copy of the memorandum issued in November.
The company’s hotels portfolio includes five star hotels Jaypee Vasant Continental in Delhi, Jaypee Siddharth at Rajendra Place in Delhi, Jaypee Palace Hotel and Convention Centre in Agra, Jaypee Residency Manor in Mussoorie, and Jaypee Greens, Golf and Spa Resort in Greater Noida. The hotels have a total of 867 operational keys.
In its information memorandum, the group had said the proposed transaction provides a unique opportunity for investors to own a sizeable asset portfolio of premium five star hotel inventory comprising unutilised floor area ratio (FAR or the amount of spare built up space) in Agra and Greater Noida hotels with the potential for addition of 300 keys to the existing inventory. It further said a significant upside potential exists through improving the operating metrics by rebranding and repositioning these hotels with an established hospitality chain and bringing in their marketing strategies, global booking systems and loyalty programmes as well as optimisation of F&B and banqueting conferencing facilities.