Vacation ownership company Mahindra Holidays and Resorts India Ltd. (MHRIL) will increase its stake in Holiday Club Resorts Oy, Finland (HCR), from 23.3 per cent to 88 per cent. The balance 12 per cent is held by the management of HCR.
The investment required for the additional 64.7 per cent stake is 28 million euros (around Rs.200 crore), and the investment would be made through MHRIL’s overseas subsidiaries. In the first instance, MHRIL had invested 18 million euros (around Rs.125 crore) for the 23.3 per cent stake.
Mahindra Holidays to invest around Rs 200 crore in Holiday Club Resorts Oy |
May invest a further Rs.72 crore to finance its growth |
In addition to the above, MHRIL may invest an additional 10 million euros (around Rs.72 crore) in HCR in the form of equity/debt to finance its growth plans.
Addressing media, Arun Nanda, Chairman, MHRIL said the deal was likely to be completed in two or three months.
Mr. Nanda is already on the board of HCR.
Holiday Club is Europe’s leading vacation ownership company with 30 resorts spread across Finland, Sweden and Spain. Mahindra Holidays currently has 183,000 vacation ownership members.
MHRIL had acquired the initial stake in HCR in July 2014 with an option to increase the stake by 2016. “We decided the exercise the option well ahead of the deadline of 2016, and working with the management of HCR over the last one year has given us the conviction that they are the right partner for our growth strategy in Europe and Middle East,” Mr. Nanda said.
HCR accounts will be consolidated with MHRIL in 2015-16. “HCR was adversely impacted by the Russian ruble crisis (since Finland is closely linked to Russia) but since then, the Finnish economy has recovered significantly.”
MHRIL operates 45 resorts in India and abroad and added 430 rooms in 2014-15. It is setting up new resorts in Goa, Dharamshala and Shimla and expanding some others. “We plan to add around 700 rooms in the next couple of years and given the average cost per room of Rs.80 lakhs to Rs.1 crore, we will invest around Rs.600-650 crore over the period,” Mr. Nanda said.
