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Berggruen in talks to buy out Dawnay Day's 4-star chain

Posted by : Akash  01/10/2008

New York-based investment company Berggruen Holdings is understood to be in talks to acquire UK investment group Dawnay Day’s four-star hotel chain Ten Hotels in India.

Sources said Berggruen Holdings, which recently forayed into India with its budget hotel brand Keys, has identified Dawnay Day’s three properties as a potential investment target, and due diligence is in the final stage. The deal, if finalised, will be over $50 million. It is not clear if the deal would also include all other real estate assets of the UK group. When contacted, Dawnay Day Hotels India MD Mandeep S Lamba said: “I am unaware of any such development.”

Dawnay Day had initiated the process to sell its investments in financial services, hotels and real estate ventures in India as the UK firm fell victim to post-subprime credit crunch following which an administrator, BDO Stoy Hayward, was appointed. The administrator is now disposing the firm’s assets across the world, including in India.

Leading hotel and real estate developers such as ITC, Royal Orchid, Pride Hotels, Sarovar group, Lemon Tree, DLF and Paraswanath were part of the race to buy out Dawnay Day’s three hotel properties and other real estate assets in India. Dawnay Day controls its real estate and hotel subsidiary in India through its two subsidiaries—Dawnay Day Hotels India and Dawnay Day India Land. Dawnay Day has a controlling stake in both these ventures.

The hotel arm has three properties in Jaipur, Ahmedabad and Pune. The Jaipur property may be ready by year-end while Ahmedabad property will be ready by the end of next year. The Pune property, which is likely to be ready by the end of 2010, is currently facing complications, sources said. “The Pune property may not be part of the package due to some complications,” a source said.

Dawnay Day AV is into broking, wealth management, portfolio management services and also distribution of mutual fund and insurance products. The company is prepared to make a commitment of up to $100 million of equity per transaction. The privately owned parent company holds net assets of over $1.5 billion and invests internationally in a range of asset classes that include PE funds and real estate.

The company hopes to be a major player in the mid-range segment, owning and managing 100-room, full-service hotels operating in the Rs 1,000 to Rs 2,000 pricing segment. The hotels will be spread across ti

Source:The Economic Times

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