Calcutta, Jan. 29: Tobacco-to-hotels major ITC has quietly scooped up a 3 per cent stake in Hotel Leelaventure Ltd.
With this, the Calcutta-headquartered conglomerate has made its second investment in a listed hotel company.
Back in 2002, ITC had set the corporate dovecotes aflutter by picking up over 14 per cent in the Oberoi-owned EIH Ltd, sparking speculation of a takeover bid.
Compared to EIH, the investment in Hotel Leelaventure is modest.
Russell Credit Ltd, a wholly owned subsidiary of ITC and a major investment vehicle, bought the shares in Leela during the third quarter of the current financial year.
Stock exchange data revealed that Russell Credit bought 113,32,090 shares in Hotel Leelaventure, which owns and operates The Leela Palaces, Hotels and Resorts in Mumbai, Bangalore, Goa and Kovalam (Kerala).
The Leela group plans to open another eight hotels with three due to come up in Gurgaon, Udaipur and Chennai later this year.
While the average cost of the acquisition is not known, the Leela stock moved between Rs 29 and Rs 19 during the period. The stock closed today at Rs 17.60 on the Bombay Stock Exchange, a tad higher than its 52-week low of Rs 17.10.
An ITC spokesperson confirmed the development. It is a routine treasury operation, he said.
Several attempts to reach Leela officials failed. Calls were not returned while mails went unanswered.
During the annual general meeting in July last year, ITC chairman Y.C. Deveshwar had said the company would invest in companies with similar business interests. We will invest if there is value, Deveshwar had said.
ITC is one of the formidable players in the hospitality segment, owning and managing properties across the country at various price points such as The Luxury Collection and Fortune.
During 2007-08, ITC had also bought 23 lakh shares in Ballarpur Industries, a paper company. It has a strong presence in the paper and paperboard business.
The companys inclination to invest in peer group companies came into focus when it picked up 14.92 per cent in EIH, which owns and operates Oberoi hotels in India and abroad.
Its stake is perilously close to a 15 per cent threshold that, if breached, will automatically trigger an open offer for another 20 per cent.
ITCs stake purchase ought not to give the Nairs — the promoters of Hotel Leelaventure — any cause for worry since they have an unassailable holding of 51.50 per cent in the company.
The transaction has taken place at a time when the domestic hotel industry has been hit hard by the economic slowdown and the terrorist attack in Mumbai last November.