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The company was hard hit by the downturn in the real estate market

DLF ropes in Goldman for Aman Resorts stake sale

DLF, India’s largest real estate company, has appointed Goldman Sachs as an advisor as it attempts to fund buyers for Aman Resorts, a luxury hotel chain it had acquired in November 2007 for $400 million.

The company, which was hard hit by the downturn in the real estate market which started in the middle of 2008 and persisted well into 2009, has said it will exit non-core businesses and bring down its overall debt to zero over a 3-year period. DLF’s debt was as much as Rs 16,000 crore at the end of 2009.

“DLF has decided to exit from the non-core businesses and focus on real estate development, including residential, commercial and retail. Since hotels are not a core business for DLF, it is looking at various options for Aman Resorts. However, the extent of divestment will depend upon the valuation that the potential suitors will bring on the table,” said a senior executive of the company, on condition of anonymity.

Currently, DLF owns 97% in Aman Resorts and its founder Adrian Zecha the rest. The company is looking at an enterprise value of $600 million or Rs 2,700 crore, said the official. It is open to selling the entire stake if the valuation is sufficiently attractive, said another senior official of the company involved in the process. Enterprise value is the sum of the equity value or the cost of buying the shares of a company, and the debt which the new owner has to service.

DLF had acquired Aman Resorts, a chain of 23 hotels across 12 countries, for $400 million in the third quarter of 2007. The $400 million consisted of equity value of $250 million and $150 million of debt. Later, the company had invested in rebuilding the old Lodhi hotel in Delhi, which is now known as Aman Lodhi. DLF spokesperson Sanjoy Roy refused to comment. “As a policy, we do not comment on market speculation,” he added.

Another official said the company had originally told its foreign partner, Mr Zecha, to bring in a strategic partner. “DLF had given time till February 2010 to Mr Zecha to bring a strategic partner or financial investors, but this did not materialise within the stipulated time. Now, the company has itself initiated the process of divestment,” said the official involved in the process. Spokespersons of Goldman Sachs could not be contacted.

Given the enterprise value of $400 million for the original acquisition and the money spent on rebuilding the Delhi property, $600 million is the minimum which DLF was willing to settle for. “The company is certainly not going to divest this asset at loss,” said an official. Aman Resorts is known to charge upwards of $750 per day. It operates three resorts in India – Aman Lodhi in New Delhi and two in Rajasthan.

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TravelDailyNews Asia-Pacific editorial team has an experience of over 35 years in B2B travel journalism as well as in tourism & hospitality marketing and communications.