Canada Pension Plan Investment Board, through CPP Investment Board Private Holdings (4) Inc., will invest up to ₹3,000 crore in Prestige Hospitality Ventures Ltd (PHVL) and acquire an aggregate stake of approximately 27%, according to a regulatory filing by Prestige Estates Projects.
The investment will take place across three tranches and will combine a primary capital infusion into PHVL with a secondary purchase of shares from Prestige Estates Projects. Consequently, the transaction will provide both fresh capital to PHVL and proceeds to its parent company.
Under the first tranche, Prestige Estates will receive ₹950 crore by selling equity shares in PHVL to CPP Investments. At the same time, PHVL will raise another ₹550 crore by issuing Series A compulsorily convertible preference shares to CPP Investments.
Furthermore, PHVL will raise ₹750 crore each through the issuance of Series B and Series C compulsorily convertible preference shares under the second and third tranches, respectively.
Overall, Prestige Estates will receive ₹950 crore through the secondary share sale, while PHVL will secure ₹2,050 crore in fresh capital through the primary investment.
Following the completion of the transaction, CPP Investments will receive certain governance and affirmative voting rights in PHVL. Additionally, the transaction documents will provide CPP Investments with exit options through either an initial public offering of PHVL or a put option against Prestige Estates and PHVL after five years from the transaction’s completion.
CPP Investments said the transaction represents its first direct investment in India’s hospitality sector. Meanwhile, PHVL owns and develops luxury and premium hotels and maintains a development pipeline across Bengaluru, Chennai, Delhi, Goa, Hyderabad, and Mumbai.
Separately, Prestige Estates Projects said it has issued a corporate guarantee for a loan facility of up to ₹400 crore that PHVL will avail from Axis Bank. The company has provided the guarantee to secure the borrowing of its wholly owned hospitality subsidiary.
