Reliance acquires 14.12% stake in EIH
Reliance Industries Limited (RIL) announced that it had acquired, through its wholly owned subsidiary Reliance Industries Investment and Holding Private Limited, from Oberoi Hotels Private Limited and certain other promoters of EIH Limited shares in EIH Limited representing 14.12% of EIH Limited at a total cost of Rs 1,021 crores approximately, according to the company website.
RIL’s investment in EIH Limited has been made as the Oberoi family had developed the “Oberoi Hotels” brand into a premier international brand in the luxury hospitality sector and as a result EIH Limited has excellent future prospects. RIL has full faith in and would support the management of EIH Limited and there is no change of management, operation or control of EIH Limited.
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I have been saying this for a long time now : Oberoi’s run awesome hotels, but unfortunately a lot of them dont make money.
most of the vilas properties are run in the red and the sheer project cost of these hotels makes them very very difficult to digest. you need someone with deep deep pockets.
Mukesh Ambani is just the man.
here is what i think will happen:
1. expect management changes within 6 months – 1 yr (especially the project & finance areas)
2. expect an open offer within 1 – 2 yrs
3. expect rapid expansion
4. expect brand change within 3 yrs
I dont think this is purely an investment from Reliance. I would like to think that it would be similar to Four Seasons or Aman (in both cases the original owners retained 3-4% ownership in the company and no brand changes were made), but I dont think so.
Mr. Oberoi will be around. The family (along with Mr. Analjit Singh) might own 10% or so eventually, but sooner than later you will see the Reliance stamp all over the company.
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