Skift Take
As it seeks to deepen its market share and broaden its portfolio, Brigade Hotel’s IPO plans highlights not just the companyâs growth potential, but also the broader optimism surrounding Indiaâs hospitality industry.
Brigade Hotel Ventures, an owner and developer of hotels primarily in South India, has filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The company said it aims to raise up to INR 9 billion ($107 million) via a fresh issue of equity shares.
Brigade Hotel said it may also seek to raise up to INR 1.8 billion ($21 million) through a pre-IPO placement.
In September, Schloss Bangalore, the luxury hospitality group behind Indiaâs The Leela Palaces, filed for a $599 million (INR 50 billion) IPO, the largest ever in Indiaâs hotel industry.
What Does Brigade Hospitality Do?
As a wholly-owned subsidiary of Brigade Enterprises, Brigade Hotel Ventures benefits from the real estate expertise of its parent company, which entered the hospitality sector in 2004. Brigade Enterprisesâ move into hospitality began with the Grand Mercure Bangalore, which started operations in 2009, and has since expanded across South India, covering key states like Karnataka, Tamil Nadu, and Kerala and into Gujaratâs GIFT City.
With nine properties totaling 1,604 rooms, Brigade Hotel properties span across major urban centers such as Bengaluru, Chennai and Kochi. The company partners with global hotel operators, Marriott, Accor, and InterContinental Hotels Group, in the upper upscale, upscale, upper-midscale, and midscale segments.
The company either owns or leases hotel assets and engage global hospitality companies to operate, maintain and market its hotel assets under management contracts.
How Will it Use the IPO Money?
Brigade Hotel said it plans to use a significant portion of its IPO proceeds â INR 4.8 billion (about $57 million) â to repay a substantial chunk of its existing debt.
Specifically, the company intends to allocate INR 4.1 billion ($49 million) for its own debt reduction and INR 690 million ($8 million) to address outstanding borrowings of its material subsidiary, together addressing over 79% of its consolidated debt.
The company plans to restructure its finances across fiscal 2025 and 2026 to reduce interest burdens and boost cash flow flexibility.
The remainder of the funds will fuel Brigadeâs ambitious expansion plans, including the development of five new hotels in high-growth regions across India. The company aims to broaden its footprint by focusing on prime markets in South India and tapping into emerging opportunities in tourism hotspots like Goa and popular pilgrimage destinations. In 2022, the number of domestic tourists who visited Indian pilgrimage sites was more than Indiaâs population â 1.43 billion.
The company will also reserve a portion of the funds for potential acquisitions.
Where Are the Hotels Coming up?
The company plans to expand its footprint with a series of high-profile properties across Southern India, catering to a range of hospitality segments. A luxury beach resort on the East Coast Road (ECR) in Chennai, Tamil Nadu, planned under the Grand Hyatt brand. The Chennai project highlights Brigade’s move to tap into the high-end resort market along Tamil Naduâs scenic coastline.
In Bengaluru, the company is eyeing the upper midscale segment with two new hotels under the Fairfield by Marriott brand. However, Brigade Hotel noted that these plans are still awaiting Marriott board approval and the signing of definitive agreements.
Brigadeâs expansion strategy also includes a luxury InterContinental hotel in Hyderabad, further bolstering its presence in India’s growing metro markets. The companyâs promoter, Brigade Enterprises has already signed a definitive agreement with InterContinental Hotels Group for this project.
Additionally, Brigade is venturing into wellness tourism with plans for a sprawling resort in Vaikom, Kerala, spread across nearly 15 acres. Construction timelines suggest that Brigade aims to complete the Chennai and Bengaluru projects by fiscal 2028, while the Hyderabad and Vaikom resorts are set to open by fiscal 2029.
Whatâs the Companyâs Current Financial Standing?
The company turned profitable in fiscal 2024, reporting a profit of INR 311 million as against a loss of INR 31 million in the previous fiscal and a loss of INR 827 million in fiscal 2022.
The companyâs revenue from operations has increased from INR 1.5 billion in fiscal 2022 to INR 3.5 billion in fiscal 2023 and over INR 4 billion in fiscal 2024.
For the first 3 months of fiscal 2025, for the period ending June 30, 2024, the company incurred a loss of INR 58 million, primarily on account of reversal of deferred tax assets following the adoption of a new tax regime, Brigade Hotel said in the draft prospectus.
The company said that it derives a significant portion of its revenue from food and beverages served at its hotels. Around 32% of its revenue from food and beverage operations in fiscal 2024.
