Lemon Tree Hotels Limited has announced a major corporate restructuring initiative through a composite scheme of arrangement that will involve the merger and demerger of several group companies. The hospitality company disclosed this significant development through a regulatory filing with stock exchanges on Friday.

Board Approval and Timeline

The comprehensive restructuring plan received formal approval from the company's board of directors during a meeting held on January 9, 2026. This board approval marks a crucial milestone in the company's strategic reorganization efforts.

Restructuring Framework

The composite scheme of arrangement represents a complex corporate action that will systematically reorganize the company's group structure. This type of arrangement typically involves multiple steps including both consolidation through mergers and separation through demergers of various group entities.

The regulatory filing indicates that this restructuring will affect several of the company's group companies, suggesting a comprehensive reorganization of the corporate structure. Such arrangements require careful planning and regulatory compliance to ensure smooth execution.

Regulatory Compliance

Lemon Tree Hotels has fulfilled its disclosure obligations by filing the necessary documentation with stock exchanges. This regulatory filing ensures transparency and keeps stakeholders informed about the significant corporate action. The formal announcement through proper channels demonstrates the company's commitment to maintaining regulatory compliance throughout the restructuring process.

Lemon Tree Hotels has unveiled a comprehensive group reorganisation that will fundamentally reshape its business structure, with global private equity major Warburg Pincus set to acquire a significant stake in its hotel ownership arm, Fleur Hotels. The strategic move aims to unlock long-term shareholder value amid the current buoyant hospitality cycle.

Warburg Pincus Investment and Stake Acquisition

According to an exchange filing, Warburg Pincus will acquire APG Strategic Real Estate Pool's entire stake in Fleur Hotels and provide substantial growth capital for expansion:

Composite Scheme of Arrangement

The boards of Lemon Tree Hotels and Fleur Hotels have approved a composite scheme of arrangement that will create two distinct, focused platforms. Under this reorganisation, Lemon Tree will operate as a pure-play, asset-light hotel management and franchising business, while Fleur will emerge as the asset-heavy hotel ownership and development arm.

The scheme is scheduled to become effective from April 1, 2026. As part of the arrangement, Lemon Tree will transfer its owned hotel assets to Fleur but will continue to manage and franchise these properties, ensuring operational continuity.

Post-Reorganisation Ownership Structure

Following the completion of the reorganisation, the ownership structure of Fleur Hotels will be distributed as follows:

Note: Percentages exclude any dilution from the proposed primary capital infusion

Leadership Transition and Asset Distribution

Founder Patanjali Govind Keswani will serve as executive chairman of Fleur Hotels and will eventually transition to a non-executive role at Lemon Tree Hotels. This leadership structure ensures continuity while allowing for focused management of each platform.

Upon completion of the reorganisation, the asset distribution will be structured to optimise operational efficiency:

Strategic Focus and Future Operations

Fleur Hotels will house all owned hotel assets and lead acquisitions and greenfield developments, positioning it as the primary vehicle for asset accumulation and development. Meanwhile, Lemon Tree will maintain its leased hotels in Indore and Aurangabad, which are nearing the end of their lease tenures.

The separate listing of Fleur Hotels on the National Stock Exchange of India and BSE within the specified timeframe will provide investors with direct exposure to hotel real estate assets while maintaining access to the asset-light management business through Lemon Tree Hotels.