Brigade Hotels IPO Launches: MD Nirupa Shankar Unveils Luxury Expansion and Debt-Free Strategy
Brigade Hotel Ventures, the hospitality division of Bengaluru-based real estate firm Brigade Enterprises, has opened its ₹759.6 crore initial public offering (IPO) for public subscription from July 24 to 28. Managing Director Nirupa Shankar revealed that the funds raised will primarily be used to repay debt, making the company virtually debt-free after the issue. This capital injection comes at a crucial time as the company gears up for its next phase of growth, with plans to add five new hotels and around 1,000 rooms by FY30.
Hotels have a longer construction cycle, typically around three years, according to Shankar. She explained that most of the funding requirement will be back-ended, aligning with the construction timeline. The company is also focusing on improving average room rates (ARRs) through a strategic push into the luxury segment. New projects include a Ritz-Carlton in Kerala, an InterContinental in Hyderabad, and a Grand Hyatt in Chennai. Shankar emphasized, “Going forward, we are looking to enhance our portfolio in the luxury deluxe segment,” which will help raise ARRs as these hotels become operational.
Brigade Hotel Ventures follows a build-and-own model and partners with global hotel brands like Marriott, Accor, and InterContinental Hotels Group (IHG) for operations. The company pays a fixed percentage of revenue as management fees, currently steady at 4–5%, and this is expected to remain consistent. The land strategy is a mix of owned and leased properties, with about 50% of its current portfolio on long-term leases, depending on market economics.
Shankar also clarified that while the company had considered a real estate investment trust (REIT) structure earlier, it chose to pursue a standalone hospitality listing to maintain a sharp operational focus. “Hospitality is a very different business model… better to grow that company individually,” she said. This decision underscores the company's commitment to focusing solely on the hospitality sector and maximizing its potential.
On gearing, the company is comfortable with a peak debt-to-equity ratio of 2:1 during construction-heavy phases but intends to keep it closer to 1.5:1 on average. This strategy ensures financial stability while allowing for growth and expansion. Brigade Enterprises, the parent company, currently has a market capitalization of around ₹26,592.5 crore. Its stock has fallen by nearly 12% over the past year, highlighting the importance of the IPO in securing the company's financial future and growth plans.
The launch of the Brigade Hotels IPO marks a significant milestone in the company's journey. With a clear focus on luxury expansion and a commitment to a zero-debt strategy, Brigade Hotel Ventures is poised to strengthen its position in the hospitality market and deliver value to its investors.
