India’s hospitality firm Lemon Tree Hotels Ltd has approved a composite scheme of arrangement that will split the group into two separate platforms, alongside a fresh investment by private equity firm Warburg Pincus into its hotel ownership arm, Fleur Hotels Ltd.
Under the proposed reorganisation, Lemon Tree will operate as a pure-play, asset-light hotel management and brand company, while Fleur will emerge as a dedicated hotel ownership and development platform with a scaled asset base and growth pipeline. The scheme is subject to regulatory and shareholder approvals.
As part of the transaction, Coastal Cedar Investment B.V., an affiliate of Warburg Pincus, will acquire APG Strategic Real Estate Pool’s entire 41.09% stake in Fleur. Warburg Pincus has also committed to invest up to ₹960 crore (around $106 million) of primary capital into Fleur in tranches to support future growth.
The deal marks a renewed partnership between Warburg Pincus and Lemon Tree, following the PE firm’s earlier investment in the group in 2006, which supported the hotel chain’s early expansion.
The reorganisation, to be implemented through a National Company Law Tribunal (NCLT) process, will consolidate hotel asset ownership under Fleur. Assets currently held by Lemon Tree will be transferred to Fleur, which will become the group’s exclusive vehicle for hotel acquisitions and development.
Lemon Tree, meanwhile, will transition fully to an asset-light model focused on management contracts, franchising, and digital capabilities.
The scheme will also result in Fleur being listed on India’s stock exchanges as a separate entity. The listing process is expected to be completed within 12 to 15 months.
Patanjali Govind Keswani, Founder and Executive Chairman of Lemon Tree and Fleur Hotels, stated that the renewed collaboration with Warburg Pincus marked a defining moment for the next phase of expansion for Fleur as the Indian hospitality industry is now at an important inflection point.
Keswani will serve as executive chairman of Fleur and will eventually move to a non-executive role at Lemon Tree.
Anish Saraf, Managing Director, Warburg Pincus, said Lemon Tree has played a pioneering role in shaping India’s mid-market hospitality segment, building a large-scale, high-quality portfolio with strong brands and operating capabilities.
Dominic Doran, Senior Director, Real Estate, Asia-Pacific, APG Asset Management, said, “This transaction in Fleur is the culmination of APG’s long-term approach to investing and provides our clients with a full-cycle return from one of the fastest growing economies in the world [..].”
The restructuring comes as India’s hospitality sector enters a period of sustained growth, supported by rising discretionary spending, strong domestic travel demand, a rebound in inbound tourism, and increased government investment in transport and tourism infrastructure. Growth in corporate travel and India’s positioning as a Meetings, Incentives, Conferences and Exhibitions (MICE) destination are also underpinning long-term demand.
Post-reorganisation, Fleur will become one of the largest owners of hospitality assets in India, with its portfolio expanding from 24 operating hotels with 3,993 keys to 41 hotels comprising 5,813 keys. The company plans to continue scaling through development and acquisitions.
Lemon Tree will continue managing hotels transferred to Fleur alongside its existing third-party portfolio, while maintaining its focus on expanding management and franchise operations in India and overseas. As of now, Lemon Tree manages 6,011 keys across 89 operational hotels, with a further 9,414 keys across 127 hotels under development.
Lemon Tree’s seven brands—Aurika Hotels & Resorts, Lemon Tree Premier, Lemon Tree Hotels, Red Fox, Keys Prima, Keys Select, and Keys Lite–cater to upper upscale, upscale, upper midscale, midscale, leisure, wildlife, and spiritual segments.
Morgan Stanley is acting as the exclusive financial adviser to the transaction.
