Hyderabad: ICICI Venture Funds is acquiring a 26 per cent stake in the equity of Hyderabad- based Viceroy Hotels. It is buying 1.14 crore equity shares and share warrants of the company through the preferential allotment route. This also includes 60 lakh equity shares and 54 lakh share warrants convertible into equity shares.

The issue is for part-financing the company's proposed expansion plans that include setting up a five-star deluxe hotel in Chennai and another starred hotel at Bangalore.

According to the K. Narasimha Rao, director finance Viceroy Hotels, "Viceroy Hotels is setting up a deluxe hotel in Chennai, which will come up near Adyar at an estimated cost of Rs460 crore. The hotel will have 350 rooms and 200 executive apartments and will be completed over the next three years. A hotel in Bangalore will also come up on Racecourse Road at an investment of Rs160 crore, which will have 200 rooms and will take off in two-and-a-half years."

Viceroy Hotels is making a preferential allotment to Rakesh Jhunjhunwala and associates and to the promoter group as well. Jhunjhunwala, who holds close to 30 lakh shares in Viceroy Hotels, would subscribe to another 10 lakh shares and 10 lakh warrants, taking his total holding in the company to 50 lakh shares, constituting about 14-per cent stake.

On Monday, the Viceroy board decided to issue 81.71-lakh equity shares and 78.28-lakh share warrants of Rs10 each at a premium of Rs77.50 a share and share warrant, aggregating to around Rs140 crore.

Viceroy promoters are also subscribing to 10 lakh shares and 12.5 lakh share warrants and after group-owned restaurants of Viceroy Hotels are merged into the company, the promoters would get an additional 40-lakh shares enabling them to retain their equity holding in the company at around 34 per cent on the post-issue paid-up capital.

The Viceroy board has approved a proposal from the US-based hospitality major JW Marriott to take the proposed Chennai hotel property on management contract. It has also authorised the managing director of the hotel to explore the possibility of entering into franchisee agreement/management contract with Marriott International for the Bangalore hotel as well.

The Viceroy stock closed at Rs 97.85 on Bombay Stock Exchange on Tuesday, gaining 4.99 per cent over the previous close, with close to 56,000 shares changing hands.