Mahindra Holidays plans IPO to fund new resorts

Chennai: Mahindra Holidays & Resorts India Ltd, a subsidiary of Mahindra & Mahindra, will tap the capital market in with an initial public offer of 10.7 million equity shares within the next couple of months, to fund its expansion plans.

The company, popular for its brand of Club Mahindra Holidays, has filed a draft red herring prospectus with the Securities Exchange Board of India for this issue, which will constitute 13 per cent of its fully-diluted post paid-up capital.

The funds from the IPO will be used for activities at existing resorts and for seven new projects at Pondicherry, Kumbhalgarh (Rajasthan), Kodambakkam (Tamil Nadu), Binsar (Uttaranchal), Theog (Himachal Pradesh) and Tungi (Maharashtra).

About Rs 48.3 crore will be spent on expanding existing resorts and Rs 146.2 crore for the new projects.

The issue comprises of the sale of 6.59 million shares (8 per cent) by the promoters (Mahindra Holdings & Finance Ltd) and a fresh issue of 4.12 million shares (5 per cent). The company has also planned pre-IPO placement of upto 2.47 million shares from the promoters’ offer.

If the pre-IPO placement happens, the size of issue to the public would be reduced to 10 per cent of the post issue capital, said Ramesh Ramanathan, managing director, Mahindra Holidays.

The issue will open end January or early February.

Kotak Mahindra Capital Company is the global coordinator and book running lead manager for the issue and HSBC Securities and Capital Markets (India) is also a lead manager.

Ramanathan said the company has had high occupancy levels – upwards of 70 per cent – over the past few years.

The company posted a profit after tax of Rs 42.54 crore for the year ended March 31, 2007, 112 per cent higher than that in the previous year.