The initial public offering (IPO) of Schloss Bangalore Ltd, which operates the luxury hotel brand "The Leela," is set to open on May 26, 2025, and close on May 28, 2025. The company aims to raise up to ₹3,500 crore from the primary market through a combination of a fresh issue and an offer for sale.

Anchor Investors

Ahead of the public subscription, Leela Hotels garnered ₹1,575 crore from anchor investors. The anchor book saw widespread participation from domestic institutional investors, including HDFC Mutual Fund (MF), ICICI Prudential MF, Nippon India MF, Mirae MF and Invesco MF, and Aditya Birla Sun Life Insurance Company. Global interest was equally notable, with very strong demand from sovereign and FPIs, including Think Invest, Fidelity, Norges Bank, Whiteoak, Lunate, UC Regents, TT International, and Ward Ferry. The company allotted 36,206,896 equity shares to 47 funds at ₹435 apiece.

IPO Details

• Price Band: The IPO price band has been set at ₹413 to ₹435 per share.
• Lot Size: The minimum lot size for an application is 34 shares, requiring a minimum investment of ₹14,042 for retail investors.
• Issue Size: The IPO comprises a fresh issue of 5.75 crore equity shares worth ₹2,500 crore and an offer-for-sale (OFS) of 2.30 crore shares aggregating to ₹1,000 crore.
• OFS: Project Ballet Bangalore Holdings (DIFC) Pvt Ltd, the promoter group entity, will divest its stake worth ₹1,000 crore through the OFS.
• Objectives: The company plans to utilize the net issue proceeds for the repayment or prepayment or redemption of certain outstanding borrowings availed by it and certain of its subsidiaries and for general corporate purposes.
• Reservation: In the IPO, up to 75% is reserved for qualified institutional buyers (QIBs), with anchor investors being allocated up to 60% of the QIB portion. Non-institutional investors (NIIs) will get 15% of the issue, while 10% has been reserved for retail investors.
• Listing: The equity shares are estimated to be listed on June 2, 2025, on both the stock exchanges, BSE and NSE.
• Book Running Lead Managers: JM Financial, Bofa Securities India, Morgan Stanley India Company, JP Morgan India, Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, IIFL Securities, Motilal Oswal Investment Advisors, and SBI Capital Markets are the book-running lead managers. Kfin Technologies is the IPO registrar.

Grey Market Premium (GMP)

The Leela Hotels IPO is showing a bullish trend in the unlisted market. According to stock market observers, the GMP has risen to ₹15 per share. This suggests that the company's shares are estimated to trade at ₹450 apiece in the grey market, which is a premium of approximately 3.45% to the IPO price of ₹435 per share. However, it is important to note that GMP is purely speculative and should not be the sole basis for investment decisions. As of May 24, 2025, the Subject to Sauda rate for the IPO is ₹300, and the expected return is around 3%.

Company Profile and Financials

Schloss Bangalore Ltd, established in March 2019, owns and manages luxury hotels under "The Leela" brand. As of May 31, 2024, the company had a portfolio of 3,382 keys across 12 operational hotels, including The Leela Palaces, The Leela Hotels, and The Leela Resorts, located across 10 destinations in India. The company's revenue and EBITDA have grown at a CAGR of 23% and 25%, respectively, over the last two years, and the business has turned profitable in FY25.

Investment Considerations

The Leela Hotels IPO offers investors an opportunity to invest in a well-known luxury hospitality brand with a strong market presence and growth potential. The company's financial performance has been improving, and the IPO proceeds will be used to reduce debt and support future growth. However, like all investments, potential investors should carefully consider the risks and uncertainties associated with the IPO before making a decision. The IPO is valued at FY25 EV/EBITDA multiple of 26.3x at the upper price band.