SAMHI Hotels IPO hits Street; should you subscribe?

SAMHI Hotels, a branded hotel ownership and asset management platform, launched an initial public offer (IPO) on Thursday, September 14, to raise up to Rs 1,370 crore. The IPO, comprising fresh issuance of shares worth Rs 1,200 crore, and an offer for sale (OFS) worth Rs 170 crore by promoters and existing shareholders, will be open for subscription for three trading days, till September 18. Gurugram-based SAMHI Hotels owns hotels and manages assets under an institutional ownership model.

Subscription status

By 3:50 pm on Thursday, the first day of the bidding process, the IPO saw an overall subscription of six per cent, having received bids for 35.2 lakh shares against the 6.3 crore shares on offer, according to provisional exchange data.

The portion reserved for qualified institutional buyers (QIBs) received no bids, and the portions meant for non-institutional investors (NIIs) and retail investors were booked two per cent and 28 per cent, respectively.

While 75 per cent of the issue is reserved for QIBs, 15 per cent is for NIIs and the remaining 10 per cent for retail investors.

Should you subscribe to the SAMHI Hotels IPO?

Zee Business Managing Editor Anil Singhvi recommends applying for the IPO from a long-term perspective. He has identified the following key points about the company:

Positive:

Strong professional management
Proven track record of hotel acquisition
Repayment of Rs 1,150 crore debt will strengthen balance sheet
Strong growth outlook

Negative:

Still a loss-making company
The asset-heavy model requires huge capital
Here are some of the key things to know about the SAMHI Hotels IPO:

Important dates

The bidding process will continue from 10 am to 5 pm for three trading days, starting September 14.

The allotment of shares under the IPO is likely to be finalised on September 22, and the initiation of the credit of shares into the accounts of winning biggers on September 26.
SAMHI Hotels shares are set to be listed on stock exchanges BSE and NSE tentatively on September 27.

Issue price

Under the IPO, SAMHI Hotels shares are available for bidding in a range of Rs 119-126 apiece in multiples of 119, translating to Rs 14,161-14,994 per lot.

Fund utilisation

The company intends to utilise the net proceeds from the issue towards repayment or prepayment of certain borrowings, and for general corporate purposes, according to its red herring prospectus (RHP).

Anchor investors

Ahead of the IPO, SAMHI Hotels raised Rs 616.6 crore from anchor investors, including SBI Mutual Fund (MF), Aditya Birla Sun Life MF, ICICI Prudential MF, Tata MF, Tata Small Cap Fund, Turnaround Opportunities Fund and the Government of Singapore.

About SAMHI Hotels

SAMHI Hotels has a portfolio of 4,801 keys across 31 operating hotels in 14 of the country's key urban consumption centres, including Bengaluru, Hyderabad, the NCR, Pune, Chennai and Ahmedabad.