Lemon Tree Hotels has announced a major strategic reorganisation of its business operations, coupled with a significant investment from global private equity firm Warburg Pincus. The company's board approved a Composite Scheme of Arrangement on January 9, confirming earlier market speculation about the restructuring.

Investment Structure and Shareholding

The transaction involves Warburg Pincus, through its affiliate Coastal Cedar Investments BV, acquiring APG's entire 41.09% stake in Fleur Hotels. Additionally, the private equity firm will commit up to ₹960.00 crore of primary capital to support Fleur's future growth initiatives.

Business Restructuring Strategy

The reorganisation will fundamentally transform both companies' operational models. Lemon Tree Hotels will transition into a pure-play, asset-light hotel management and brand platform, while Fleur Hotels will become the group's hotel ownership and development company. All existing hotel assets owned by Lemon Tree will be transferred to Fleur, which will also lead future hotel acquisitions and development projects.

Post-transaction, Fleur Hotels will be listed as a separate entity on Indian stock exchanges, with the listing process expected to complete within 12 to 15 months following regulatory approvals.

Subsidiary Consolidation

The scheme includes comprehensive subsidiary restructuring:

• Merger with Lemon Tree: Carnation Hotels and Hamstede Living (wholly owned subsidiaries)
• Merger with Fleur Hotels: Oriole Dr Fresh, Sukhsagar Complexes, Manakin Resorts, and Canary Hotels

Asset Transfer and Portfolio Expansion

Twelve hotels will be demerged into Fleur, including 11 operational properties and one under-construction hotel in Shimla. The transfer also includes development capabilities and an investment in a hotel under construction in Shillong.

All hotels under Fleur will operate under a new hotel operating agreement with Lemon Tree, effective April 1, 2026. Lemon Tree will continue to operate and manage these hotels under its asset-light model while also managing and franchising its third-party owned portfolio in India and overseas.

Transaction Details

This marks the second strategic partnership between Lemon Tree Hotels and Warburg Pincus. Morgan Stanley served as the exclusive financial advisor for the transaction. The composite scheme remains subject to approvals from shareholders, regulators, and the National Company Law Tribunal.

Source: https://www.cnbctv18.com/market/stocks/newsbreak-confirmedlemon-tree-hotels-warburg-pincus-to-invest-rs-960-cr-fleur-hotels-ws-l-19818139.htm

Lemon Tree Hotels Limited has announced a major strategic reorganization through a Composite Scheme of Arrangement, approved by its Board of Directors on January 9, 2026. The comprehensive restructuring will create two distinct and complementary business platforms, positioning the company for enhanced growth and value creation.

Strategic Restructuring Overview

The proposed reorganization will establish two clearly differentiated platforms. Lemon Tree will emerge as a pure-play asset-light company focused on hotel management, brand and loyalty services, distribution, and digital solutions. Meanwhile, Fleur Hotels will operate as a large-scale growth-oriented hotel ownership and leasing platform with comprehensive in-house development capabilities.

Warburg Pincus Strategic Partnership

Warburg Pincus, the leading global private equity firm, will acquire APG Strategic Real Estate Pool N.V.'s entire 41.09% shareholding in Fleur Hotels. This marks the second strategic partnership between Warburg Pincus and Lemon Tree Hotels, following their earlier investment in 2006. The partnership includes primary investment rights of up to ₹960.00 crores in equity capital, providing substantial growth capital for Fleur Hotels' expansion plans.

Post-Restructuring Shareholding Structure

Upon scheme completion, Lemon Tree shareholders will own 73.99% of Fleur Hotels through combined direct and indirect holdings. The ownership structure will comprise 32.96% direct shareholding by Lemon Tree shareholders, 41.03% ownership by Lemon Tree, and 26.01% ownership by Warburg Pincus.

Business Platform Positioning

Lemon Tree will operate as an industry-leading fee business managing approximately 11,700 rooms across its portfolio. The company will maintain ownership of 2 hotels with 202 rooms while managing 39 hotels with 5,556 rooms for Fleur Hotels and 89 operational hotels with 6,011 rooms for third-party owners. The asset-light model targets 70%+ EBITDA margins with minimal capital requirements for growth.

Fleur Hotels will emerge as one of India's largest hospitality asset owners, operating 39 hotels with 5,556 rooms and 2 under-construction properties with 256 rooms. The platform combines stable operating assets with clearly defined development and acquisition pipelines, supported by end-to-end in-house development capabilities.

Growth Pipeline and Market Position

The restructured entities maintain significant growth trajectories. Lemon Tree's managed and franchised hotel pipeline includes 9,414 rooms from third-party owners, while Fleur Hotels has active discussions for acquiring over 2,500 additional rooms. The combined portfolio spans 130+ destinations across India's key markets, including major metropolitan areas and emerging urban centers.

Implementation Timeline and Approvals

The scheme requires necessary shareholder and regulatory approvals, with the complete process to listing expected within 12-15 months. Following approval, Fleur Hotels will be listed as a separate entity on Indian stock exchanges. All hotel assets in Fleur Hotels will enter new Hotel Operating Agreements effective April 1, 2026, ensuring seamless operational continuity during the transition.