Brookfield-backed Schloss Bangalore Ltd, which operates luxury hotels under the Leela brand, will hit the capital market with an initial public offer of ₹3,500 crore, making it the largest IPO in the Indian hospitality sector.

This would be the second instance when investors would get a chance to participate in a company that owns some of India’s iconic luxury properties, such as the Leela Palace New Delhi and Udaipur.

Before March 2019, Leela properties were part of the Captain Nair family promoted Hotel Leela Ventures, a listed entity. All but their Mumbai property were acquired by Brookfield, the New York headquartered investment firm, as HVL was forced to raise cash to repay mounting debts.

Since then, the business has transformed, significantly expanding its reach and industry revenue matrix, such as average room rent and revenue per available room. The number of properties also went up from eight to 13, expanding the number of rooms from 2,495 to 3,553 by focusing on a single price segment of the hospitality sector.

The group plans to double down on that segment going forward. “We are the only institutionally owned and managed pure-play luxury hospitality company in India,” Anurag Bhatnagar, CEO of the company, said, adding it would continue to tread on that path.

Bhatnagar argued that the luxury segment is ‘significantly inelastic’ when it comes to peak and trough. Consequently, it intends to grow in this segment. It has a pipeline of seven more properties with 678 keys going forward, excluding a luxury property planned in BKC, Mumbai.

The luxury hotel segment, which makes up just 17 per cent of the branded hotel market, has a long runway for growth. Further, demand for luxury rooms is projected to grow at a rate of 10.6 per cent annually from FY24 to FY28, while supply will increase only 5.9 per cent.

Proceeds of the IPO, which will have a price band of ₹413-435 per share, would power the expansion plan, apart from retiring debt. The IPO is going to be a combination of a fresh issue of shares worth ₹2,500 crore and an offer for sale (OFS) of stocks valued at ₹1,000 crore by promoter Project Ballet Bangalore Holdings.

Meanwhile, Temasek-backed e-commerce enablement platform Shiprocket has filed draft papers with Sebi for an initial public offering through a confidential pre-filing route.