Lemon Tree Hotels Limited (Lemon Tree) and Fleur Hotels Limited (Fleur) have announced that their respective Boards of Directors have approved a Composite Scheme of Arrangement (the Scheme) aimed at simplifying the group structure, sharpening strategic focus, and unlocking long-term value for shareholders. Notably, the scheme remains subject to customary regulatory and shareholder approvals.
Under the proposed reorganisation, the group will establish two distinct yet complementary platforms. On one hand, Lemon Tree Hotels Limited will operate as a pure-play, asset-light hotel management and brand platform. On the other hand, Fleur Hotels Limited, currently a subsidiary of Lemon Tree, will emerge as a large-scale, growth-oriented hotel ownership and development platform with a strong and attractive pipeline.
Additionally, the Board of Directors approved the execution of a Share Purchase Agreement that enables Coastal Cedar Investment B.V., an affiliate of Warburg Pincus, to acquire the entire 41.09 percent equity stake held by APG Strategic Real Estate Pool N.V. (APG) in Fleur. Simultaneously, the Board approved the execution of a Shareholders’ Agreement providing for a primary investment of up to Rs 960 crore by Warburg Pincus, to be infused in tranches to support Fleur’s future growth.
Importantly, this investment marks a renewed partnership between Warburg Pincus and Lemon Tree, following Warburg Pincus’ initial investment in 2006, which supported Lemon Tree’s early growth and helped establish it as a leading hotel brand and platform in India.
Through an NCLT-approved process, the scheme will reorganise the group’s asset ownership and operating structure. As part of this process, Lemon Tree will transfer its hotel assets to Fleur, which will serve as the group’s exclusive asset ownership and development company. Going forward, Fleur will spearhead all hotel acquisitions and developments, while Lemon Tree will transition fully to an asset-light model, focusing on hotel management, franchising, and digital businesses. Furthermore, the scheme will result in Fleur’s listing on the NSE and BSE.
As part of the leadership realignment, Patanjali Govind Keswani, founder of Lemon Tree Hotels, will assume the role of Executive Chairman of Fleur Hotels and will eventually transition to a non-executive role at Lemon Tree.
Meanwhile, this reorganisation and investment coincide with a period of sustained growth in India’s hospitality sector. Rising disposable incomes, increased discretionary spending, strong domestic intercity travel across air, rail, and road networks, and a rebound in international tourism continue to fuel demand. In addition, the Government of India’s focus on tourism and investments in aviation, high-speed rail, and four-lane highway infrastructure further strengthens sector fundamentals. Growing corporate travel and India’s emergence as a key MICE destination also support long-term growth, according to a release issued by Lemon Tree.
Commenting on the development, Patanjali Govind Keswani, founder and executive chairman of Lemon Tree and Fleur Hotels, said, “This scheme is intended to create a simplified, transparent, and growth-oriented structure for both companies, which we believe will enhance long-term value for our shareholders. We are also pleased to renew our partnership with Warburg Pincus, with whom we share a long history of building the foundations of Lemon Tree. This collaboration marks a defining moment as we enter the next phase of expansion for Fleur. With the Indian hospitality industry at an important inflection point, we look forward to leveraging Warburg Pincus’ global network and deep real estate and hospitality experience to scale responsibly, advance digital-led capabilities, and embed sustainability as a core pillar of Lemon Tree and Fleur’s long-term growth journey.”
Echoing this sentiment, Anish Saraf, Managing Director, Warburg Pincus, stated, “We are pleased to once again partner with Patu and the Fleur leadership team to support the next chapter of growth for the platform. Lemon Tree has played a pioneering role in shaping India’s mid-market hospitality segment, building a large-scale, high-quality portfolio with strong brands and operating capabilities. With favourable industry fundamentals and a clear strategic roadmap, we look forward to supporting the team as they continue to scale the business.”
At the same time, Dominic Doran, Senior Director, Real Estate, Asia-Pacific, APG Asset Management, said, “As we continue our long-standing association with Lemon Tree, we are also proud to have supported Fleur Hotels for more than a decade to become one of India’s leading and socially inclusive hospitality platforms. This transaction in Fleur is the culmination of APG’s long-term approach to investing and provides our clients with a full-cycle return from one of the fastest-growing economies in the world. We thank Patu and the Fleur team for their hard work and commitment to reach this milestone as the company enters its next phase of growth.”
As part of the scheme, Lemon Tree will merge its wholly owned subsidiaries, Carnation Hotels and Hamstede Living, into the parent company. In parallel, four other wholly owned subsidiaries—Oriole Dr. Fresh, Sukhsagar Complexes, Manakin Resorts, and Canary Hotels—will merge with Fleur in exchange for the issuance of shares by Fleur to Lemon Tree.
Furthermore, Lemon Tree will demerge 12 hotels, including 11 operational hotels and one under-construction hotel in Shimla, along with associated development capabilities, into Fleur. The scheme will also transfer Lemon Tree’s investment in an under-construction hotel in Shillong, held through a 100 percent subsidiary, to Fleur.
Once the Scheme becomes effective, Lemon Tree shareholders on the record date will own 32.96 percent of Fleur, while Lemon Tree will directly hold 41.03 percent, and Warburg Pincus will own the remaining 26.01 percent (excluding dilution from the proposed primary investment).
Following receipt of all regulatory and shareholder approvals, Fleur will list as a separate entity on Indian stock exchanges, with the entire process expected to conclude within 12 to 15 months.
Overall, the proposed reorganisation creates two focused growth platforms: an asset-light hospitality management platform and a hotel ownership and development platform. Fleur will combine its operating assets with a clearly defined acquisition and development pipeline, while Lemon Tree will continue to expand its management and franchise portfolio across India and international markets. The proposed capital infusion from Warburg Pincus will strengthen Fleur’s balance sheet and enable risk-mitigated growth through asset development and acquisitions.
As a result, Fleur will become one of India’s largest hospitality asset owners, expanding its owned portfolio from 3,993 keys across 24 operating hotels to 5,813 keys across 41 hotels. Concurrently, Lemon Tree will continue to manage its leased hotels in Indore and Aurangabad and will manage an additional 1,820 keys across 17 hotels transferred to Fleur. Lemon Tree will also remain focused on scaling its asset-light portfolio, which includes 6,011 keys across 89 operational hotels and 9,414 keys across 127 hotels under development in India and overseas.
