Berggruen In A Thousand Crore Rupees Expansion

Berggruen Holdings, a New York-based private investment company, which is setting up a series of three- and four-star hotels under its arm Berggruen Hotels, will invest over Rs 1,000 crore in India till 2012.
This quantum will be funded through a debt-equity ratio of 2:1. The company has tied up with IDFC for a loan of Rs 130 crore in its first tranche to fund the construction of eight properties.
Partha Chatterjee, whole-time director and chief marketing officer, Berggruen Hotels, said, “We are also looking to tie up with other funding agencies.” He said, “The funding for the first tranche from IDFC is in the ratio of 1:1 while it will be in the 2:1 ratio for the second tranche.”
Chatterjee said that the entire quantum of debt will be drawn up according to a need-based blueprint to fund about 38 properties in India till 2012 and will include the cost of land and construction.
So far, Berggruen has spent Rs 150 crore in acquiring land in about 18 cities. It had slowed down its land acquisition spree some time ago, daunted by the spiraling realty costs. In some cities-Mumbai, Delhi, Chennai, Jaipur and Pune, for instance-realty prices shot up by 50-60%, forcing Berggruen and other hospitality players to slow down.
However, now, with the realty market depressed, hoteliers have become bullish again.
The first Berggruen property is likely to start operating from February next year in Thiruvananthapuram, as the company had zeroed in on land there earlier.
Berggruen will fund its overseas ventures according to a need-based plan, like it is doing in India, since there is no point in keeping idle money, Chatterjee said.
But, according to hotel industry analysts, a quantum of about $100 million could be required for such ventures.
The company is also looking at greenfield projects overseas — in the Middle East and North Africa region, South East Asia and South Asia. It is looking at five properties in Morocco, six in the United Arab Emirates and four in Turkey.
In South Asia, Sri Lanka and Maldives are on the radar. In Morocco and UAE, the company will develop greenfield projects through the joint venture route.
In Turkey, it will develop and manage the properties on its own since Berggruen has a large establishment there.