Warburg Pincus Invests Rs 960 Crore in Lemon Tree Hotels' Subsidiary Fleur, Takes 41% Stake

Lemon Tree Hotels has announced a significant strategic reorganization and investment from Warburg Pincus. The board has approved the acquisition of a 41.09% stake in its subsidiary, Fleur Hotels, by Warburg Pincus through Coastal Cedar Investment BV. This investment amounts to Rs 960 crore and will be made in tranches.

The stake purchase will be carried out by Coastal Cedar Investment BV, an affiliate of Warburg Pincus, from APG Strategic Real Estate Pool NV. This move is part of a broader reorganization plan that aims to unlock long-term shareholder value by creating two focused, high-growth platforms.

Under the reorganization, Fleur Hotels will be listed separately, while Lemon Tree transitions into a pure-play, asset-light hotel management and brand platform. Fleur will become the group’s exclusive hotel asset ownership and development company. The reorganization will be implemented through a composite scheme of arrangement, subject to regulatory and shareholder approvals, and an NCLT-approved process.

Hotel assets currently owned by Lemon Tree will be transferred to Fleur, which will lead all future hotel acquisitions and development for the group. “This scheme is intended to create a simplified, transparent, and growth-oriented structure for both companies, which we believe will enhance long-term value for our shareholders,” said Patanjali Govind Keswani, founder of Lemon Tree. Keswani will serve as the Executive Chairman of Fleur Hotels and will eventually move to a non-executive role at Lemon Tree.

Anish Saraf, Managing Director at Warburg Pincus, expressed confidence in the strategic move. “Lemon Tree has played a pioneering role in shaping India’s mid-market hospitality segment, building a large scale, high-quality portfolio with strong brands and operating capabilities. With favourable industry fundamentals and a clear strategic roadmap, we look forward to supporting the team as they continue to scale the business.”

As part of the restructuring, Lemon Tree will merge two wholly owned subsidiaries—Carnation Hotels and Hamstede Living—into itself, while four others will be merged into Fleur. Additionally, 12 hotels, including one under construction in Shimla and an investment in a hotel project in Shillong, will be demerged into Fleur.

The listing of Fleur Hotels on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) is expected to be completed within 12 to 15 months. After the transaction, Fleur will become one of India’s largest owners of hospitality assets, with its portfolio expanding from 3,993 keys across 24 hotels to 5,813 keys across 41 hotels.

Lemon Tree will continue to operate its existing leased hotels in Indore and Aurangabad, which are approaching the end of their respective lease terms. It will also manage an additional 1,820 keys and 17 hotels transferred to Fleur, alongside its existing managed portfolio.