Deals

Goldman Sachs bolsters Indian hospitality exposure

The New York-headquartered investment bank has invested INR 4.41 billion in SAMHI Hotels, its second platform-level deal in India in six months.

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Wall Street investment bank Goldman Sachs has made an investment of INR 4.41 billion ($66 million; €61.4 million) for an undisclosed stake in SAMHI Hotels, a Gurgaon-headquartered Indian hospitality development and investment company.

SAMHI Hotels, established in 2011, is partially owned by Sam Zell-led private equity real estate firm Equity International and also has the IFC Group as one of its shareholders.

As a developer, owner and buyer of branded hotels across India, the firm currently owns 16 hotels. In the next 12 to 18 months, it is targeting a nationwide footprint of 26 hotels with 3,900 rooms in 12 cities.

“This investment from Goldman Sachs, an experienced investor in India will accelerate our firm’s platform across the country and catalyze further acquisition-led growth,” said Ashish Jakhanwala, founder and chief executive officer of SAMHI Hotels.

Following the investment, Goldman Sachs now has three board seats at the firm, according to Indian news reports.

Goldman Sachs has been among the growing list of international firms increasing their investment exposure to the Indian real estate sector via platform-level and entity-level transactions.

In August, the bank invested $150 million for a minority stake in Piramal Realty, the real estate development arm of the Mumbai-based business conglomerate Piramal Group. The deal came close on the heels of global private equity firm Warburg Pincus’ $284 million investment in Piramal Realty in July.

“On the back of the reform momentum, India is witnessing a steady recovery in economic activity driven by domestic demand. We anticipate this to lead to an upturn in the hotel sector. This investment is consistent with our strategy to invest in sectors and infrastructure that assist in the continued growth and development of India,” Sonjoy Chatterjee, chairman of Goldman Sachs India said on the investment in SAMHI.

Goldman Sachs has been actively doing deals in the country’s hospitality sector. Last year, Goldman Sachs invested around $40 million in the hospitality arm of Vatika Group, a Gurgaon-based property developer. Yet in October 2013, it sold its entire 73 percent stake in City View Bangalore Properties to a partnership between The Blackstone Group and Embassy Group, a Bangalore-headquartered property development firm.