The clearance from the Foreign Investment Promotion Board will allow the Hyatt Place plans to continue says Ratnesh Verma, senior VP – Real Estate and Development, Hyatt.
Can you share more details about your proposal to FIPB?
Hyatt’s proposal to FIPB was to seek approval for HP India Holdings Limited (a Hyatt affiliate entity registered in Mauritius) to invest in a joint venture company in India with Emaar MGF Land Limited to the extent of 26%. The Indian joint venture company is Aashirwad Conbuild Pvt. Ltd. that is registered in India wherein HP India Holdings will invest 26% and Emaar MGF will invest 74%.
What does it mean for you to get FIPB clearance? When is the final clearance expected?
As per the foreign investment regulations, Hyatt is required to seek FIPB approval before investing in the joint venture company. The FIPB approval followed by the clearance from the Ministry of Finance which is expected shortly will thus allow Hyatt to remit the funds to subscribe to its share of investment to the joint venture company.
What is the total size of expected investment that Hyatt and EMAAR MGF will put together for these projects?
The total expected investment for the six projects is around US$200 million and Hyatt’s equity investment in the joint venture is 26%. Emaar will invest the balance 74% of the equity in the joint venture.
How are you going to raise that fund? Will foreign banks invest?
We have had preliminary discussions with Indian financial institutions for debt, however, we anticipate that the debt requirement will only arise over the next 6-12 months and the debt equity ratios will be based on market dynamics and project specific requirements.
You are predominantly into managing hotels. Why look at hotel development?
Hyatt’s core business model is management of hotels and will continue to remain so. Hyatt is not a real estate company and primary objective of any investment remains to gain distribution or for brand launch / awareness. Hyatt’s decision to invest in this joint venture was aimed at launching the Hyatt Place brand in India.
Are your 14 other full scale hotels (under development) in India also being done through a JV partnership?
Of the 14 full service hotel projects announced earlier this year, Hyatt is not investing in any project. These projects are with owners of existing hotels in India as well as other real estate developers in India which represent Hyatt’s new partnerships in the region.
