HCL Capital Leads $385 Million Stake Acquisition in ITC Hotels

NEW DELHI – HCL Capital Private Limited, affiliated with the prominent HCL Group, has emerged as the primary buyer in a substantial block deal involving shares of ITC Hotels, acquiring a 14.58 crore share stake worth approximately ₹2,998 crore (roughly $385 million USD). The transaction, completed Friday, marks a significant shift in ownership of the hotel chain following its recent demerger from ITC Limited.

BAT Exits ITC Hotels Amidst Debt Reduction Strategy

The sale was initiated by British American Tobacco (BAT) through its wholly-owned subsidiaries – Tobacco Manufacturers (India) Limited, Myddleton Investment Company Limited, and Rothmans International Enterprises Limited – collectively offloading 18.75 crore shares. BAT stated the proceeds from the sale will be instrumental in achieving its target leverage range of 2–2.5x adjusted net debt/adjusted EBITDA (excluding Canada) by the end of 2026. This move reflects a broader strategy by BAT to streamline its portfolio and reduce debt, focusing on core tobacco and new category products.

“Our direct shareholding in ITC Hotels was a result of the demerger process completed by ITC earlier this year,” explained BAT Chief Executive Tadeu Marroco. “A direct stake in ITC Hotels is not a strategic holding for BAT, therefore, I am pleased that the proceeds from this transaction will further support continued progress towards our stated 2026 leverage corridor.”

Institutional Investors Join the Fray

HCL Capital wasn’t the sole participant in the block deal. A diverse group of institutional investors also took significant positions in ITC Hotels, signaling strong market confidence in the company’s future prospects. Nippon India Mutual Fund, Societe Generale, Morgan Stanley, Abu Dhabi Investment Authority (ADIA), BNP Paribas, and Vanguard Group all participated, collectively investing a substantial sum.

Specifically, Nippon India MF acquired over 2.57 crore shares for ₹530 crore, while Societe Generale purchased 21.60 lakh shares for ₹44.42 crore. Morgan Stanley Asia Singapore Pte. bought 9.16 lakh shares for ₹19 crore, and BNP Paribas Arbitrage secured 42.06 lakh shares. ADIA and Vanguard Group added 6 lakh and 80.67 lakh shares respectively, representing investments of ₹12.34 crore and ₹166 crore.

ITC Hotels: A Post-Demerger Landscape

ITC Hotels, established in 1975, operates over 140 hotels across more than 90 destinations throughout the Indian subcontinent. The company began trading as an independent, publicly listed entity in January 2025 following its demerger from ITC Limited. The initial listing price on the Bombay Stock Exchange (BSE) was ₹188, and ₹180 on the National Stock Exchange (NSE), representing a market capitalization of approximately ₹39,000 crore. However, this initial price was lower than the ₹260-₹270 valuation assigned during a special price-discovery session prior to the listing.

The demerger and subsequent stake sale reflect a broader trend in the Indian market towards unlocking value through the separation of non-core businesses. This allows parent companies like ITC to focus on their primary operations while providing investors with direct exposure to potentially high-growth sectors like hospitality.

Implications for India’s Tourism Sector

The investment by HCL Capital and other major institutions comes at a pivotal moment for India’s tourism sector. According to the World Bank, tourism contributed approximately 6.3% to India’s GDP in 2019, before the COVID-19 pandemic. While the sector experienced a significant downturn during the pandemic, it is now showing strong signs of recovery, fueled by both domestic and international travel. The Indian government has set ambitious targets to increase tourism revenue, and investments in hotel infrastructure, like those facilitated by this block deal, are crucial to achieving those goals.

The influx of capital into ITC Hotels is expected to support the company’s expansion plans and enhance its service offerings, further bolstering its position in the competitive Indian hospitality market. HCL Capital’s involvement, with Kiran Nadar and Roshni Nadar Malhotra holding key non-executive positions, signals a long-term commitment to the sector and a belief in its growth potential. The shares were purchased at ₹205.65 apiece, a 1% discount from the previous day’s closing price of ₹207.72 on the NSE.

This transaction underscores the continued interest of both domestic and international investors in the Indian economy and its potential for growth, particularly within the rapidly expanding tourism and hospitality industries.