Lemon Tree Hotels (LEMONTREE) Investor update summary

Strategic rationale and sector context

• The hospitality sector in India is entering a structural upcycle with strong demand and favorable long-term outlook, driven by rising travel, tourism, and infrastructure investment.

• Significant investments have been made in renovations, digital capabilities, and technology to enhance pricing, revenue, and margins.

• The reorganization aims to create two distinct, well-capitalized businesses: asset-light Lemon Tree and asset-heavy Fleur, unlocking long-term shareholder value.

• Transition to independent, professionally led management teams for both Lemon Tree and Fleur to sharpen strategic focus.

Strategic reorganization and transaction structure

• Group to be split into two platforms: asset-light Lemon Tree (management, brand, digital services) and asset-heavy Fleur Hotels (ownership, development, leasing).

• Lemon Tree merges two subsidiaries; four more subsidiaries and 12 hotels (11 operational, 1 under construction) demerged into Fleur Hotels.

• Fleur's owned portfolio expands to 5,813 keys across 41 hotels post-demerger.

• Fleur Hotels to be listed as a separate entity within 12–15 months, pending approvals.

• The reorganization is expected to be completed within 12 to 15 months.

Structure, ownership changes, and shareholding

• Lemon Tree shareholders will own about 74% of Fleur (33% directly, 41% indirectly), prior to Warburg Pincus infusion.

• Warburg Pincus will acquire APG's 41.09% stake in Fleur Hotels and invest up to INR 960 crore in equity capital.

• Post-transaction, Warburg Pincus will own 26.01% of Fleur Hotels (excluding further dilution).

• Public shareholding in Fleur Hotels to be 25.62% post-transaction (excluding new Warburg Pincus investment).

• Share entitlement ratios detailed for transfer of subsidiaries and hotel assets.