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APG invests again in India’s Lemon Tree

The Dutch pension administrator reportedly has invested $50 million in the New Delhi-based hotel company, increasing its stake from 5.7% to 13%.

APG, the large Dutch pension administrator with approximately €346 billion of assets, has increased its exposure to Indian real estate by adding to an investment in New Delhi-based hotel company Lemon Tree, according to local reports.

APG has raised its stake in the mid-market hotels company to 13 percent from 5.66 percent for a cost of $50 million. The Economic Times of India reported chairman Patu Keswani as saying the capital injection would expand Lemon Tree’s rooms under management to 8,000 by 2017. Currently, the firm operates 2,800 rooms. “Our plan is to be in the top two companies in terms of ownership of hotels in India,” he said.

The repeat investment by APG follows the pension manager’s initial backing in 2012, which was intended to facilitate the company’s room growth to 4,500 rooms by the end of 2016 and, as such, is an extra endorsement of the venture.

Sachin Doshi, then a senior portfolio manager at APG and now its head of non-listed real estate for Asia, said at the time of the initial investment: “We see significant room for growth in the supply-constrained mid-scale hotel segment in India and are delighted to partner with Lemon Tree Hotels and Patu Keswani in this endeavour.”

APG’s initial investment in Lemon Tree was its first in the country. It was followed two months later by a $95 million investment in a platform with middle-income housing developer Godrej Properties. That platform now has grown to $200 million of equity and, like with Lemon Tree, APG is expected to add more capital over time.