In its attempt to take advantage of the current buoyance in the stock market, Mahindra Holidays & Resorts India Ltd., a part of the infrastructure sector of the Mahindra Group, is coming out with a public issue of 92 million equity shares at a price band of between Rs 275 and Rs 325 per share.
The IPO opens tomorrow and closes on June 26.
The company plans to deploy the proceeds to set up new resorts and to expand existing ones.
At least 60 per cent of the issue will be allocated on proportionate basis to qualified institutional buyers, out of which 5 per cent will be available for allocation to mutual funds. About 10 per cent of the issue will be available for allocation to non-institutional bidders and 30 per cent for allocation to retail individual bidders.
A leading player in the vacation ownership space, the company's flagship brand 'Club Mahindra Holidays', has a fast growing customer base of over 79,000 members and 23 Resorts at some of the most exotic spots in India and abroad.
The company plans to expand the inventory of apartments and enhance facilities at Coorg in Karnataka, Ashtamudi in Kerala, renovate the resort at Ooty (Tamil Nadu) and construct new resorts at Tungi in Maharashtra and and Theog, in Shimla.
The company had earlier planned an IPO in the first quarter of 2008, and has filed a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offering of 10,719,347 equity shares of Rs10 each for cash at a price to be decided through a 100-per cent book-building process.
However, it didn't take place because of bad market conditions.
As on May 31, 2009, the company had a little over 96,000 members and 27 resorts across India and Thailand. Vacation ownerships through memberships provide members the right to use the company's resorts over the period of their membership. Members have the flexibility to choose different resorts and time every year. They are also provided a fixed price structure.
The company launched a separate brand called Club Mahindra Fundays in October 2006 to lure the corporate houses. It has a travel and holiday related services portal, called clubmahindra.travel.
There is a focus on foreign tourists through the brand 'Mahindra Homestays', which markets homestays to overseas and domestic travelers. Catering to such wide range of holiday-seekers offers a tremendous potential, considering their preferences in terms of time and locations.