Lemon Tree promoters bought back the stake from Warburg, sources said, adding that Rahul Pandit, chief executive officer (CEO) and managing director (MD) of the company also quit
“Apparently, Warburg was not happy with the way the JV had progressed in the last two-three years,” said the sources.
Lemon Tree promoters bought back the stake from Warburg, sources said, adding that Rahul Pandit, chief executive officer (CEO) and managing director (MD) of the company also quit.
Warburg was an early investor in Lemon Tree. In 2018, Warburg shed 12 per cent stake in Lemon Tree Hotels
after 13 years during the company's initial public offering (IPO) and remaining 12.4 per cent a year later.
Recently, Warburg bought a 24.48 per cent stake from HDFC in Goldman Sachs-backed student housing company Good Host Spaces for Rs 216 crore.
Warburg did not offer any comments on ending the JV.
When contacted, Patu Keswani, chairman and managing director, Lemon Tree Hotels, said, “All plans related to the co-living business have been deferred and will be reviewed after a year. The issue now is about riding this wave and not making additional investment,” he added.
“All I can say, at this point, is it’s far in our priority list,” said Keswani.
Warburg set up the JV with Lemon Tree Hotels
in 2018 that planned to invest as much as Rs 3,000 crore ($426 million) to develop accommodation for students and young working professionals.
Warburg held a 68 per cent stake in the joint venture while Lemon Tree owned 30 per cent. The remaining two per cent was held by Lemon Tree's Keswani.
“Warburg must have seen good prospects in student housing; hence the decision to go with Good Host,” said the sources.
Good Host has 18,000 student beds and looks to add 50,000 beds in two years.
Sources said that shared spaces such as co-working, co living and others were hit hard during the pandemic but have good prospects.
Warburg is known for staying long-term in its investee companies.
For instance, in Lemon Tree, it stayed invested for 13 years. In Kotak Mahindra Bank, it stayed for over seven years and AU Small Finance Bank, it stayed for six years.
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