Holdings in international hotel chain that baulked at ‘Indian’ management role slumps more than 50% in value.
The Tata group’s Indian Hotels Company (IHCL), which operates the Taj hospitality chain, must now wish it had never made this investment. Three years after picking up an over 10 per cent stake in Bermuda-based hotel chain Orient Express Hotels, the company has seen the value of its investment plunge by more than half.
BAD BUY
Orient had said an Indian firm would hurt its brand
Tata can’t exit with stock erosion and Orient stand
Tata $247-mn share buy Is now worth just $93 mn
Tata has 2.6% vote while promoters have 66.5%
This substantial erosion in the value of the NYSE-listed Orient’s shares since then has meant that IHCL is sitting on a loss of over Rs 500 crore on its investment.
IHCL's interest in the company has seen a rapid decline, especially over the past 12 months, with the Mumbai-based company abstaining from a rights issue and a new public issue launched last month by Orient.
With a further addition of Class-A shares in the market, IHCL's stake in Orient has shrunk to 7.06 per cent, against 11.5 per cent three years ago. The US luxury hospitality company suffered the brunt of the recession that hit most developed markets where it had its properties, eroding its share value.
Source