IFC, part of the World Bank Group, has invested $21 million in SAMHI Hotels through compulsory convertible debentures in a bid to strengthen tourism infrastructure in India.
It is the IFC’s first investment in India’s hotel sector and is targeted at boosting the affordable and mid-market segment of the market, it said in a statement.
The compulsory convertible debenture, a debt instrument that will convert into equity at some later date, will create 2,600 jobs across SAMHI’s various hotel projects in India and promote energy-efficient hotel design and construction, it said. Of these jobs, almost 800 will be for women.
In this its third round of funding, SAMHI plans to expand its portfolio by developing greenfield hotels and through acquisitions in tier I and II cities. It has seven operational hotels in Greater Noida, Ahmedabad, Bangalore, Hyderabad and Pune.
Ashish Jakhanwala, managing director and chief executive of SAMHI Hotels, said: “This investment is an effort to strengthen the tourism infrastructure in India. Besides providing long-term financing, IFC will help us formulate environmental and social standards, and adopt green building design principles.”
Vipul Prakash, director for manufacturing, agribusiness and services for Asia Pacific at IFC, said: “IFC’s investment is an affirmation of the support it provides to affordable hotels in countries with increasing domestic travel and rapidly growing middle classes.” Globally, IFC has funded $2 billion to over 270 hotel projects. The hotel and tourism industry is a major contributor to employment, foreign exchange earnings and tax revenues in emerging markets, it said.
Incorporated in 2011, SAMHI was one of the first hotel ownership and asset management focused companies in India and has partnered with operators such as Marriott, Starwood Hotels, Accor and Hyatt in the past, to manage its portfolio of 25 hotels.