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Lemon Tree Hotels and Warburg Pincus enter into a JV to form a co-living platform

The JV partners will initially invest Rs 1,500 crore in equity over a period of time.

, ET Bureau|
Last Updated: Dec 27, 2018, 10.34 PM IST|Original: Dec 27, 2018, 08.05 PM IST
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Lemon Tree Hotels, Warbug Pincus form JV, envisage Rs 3,000 crore investment
The JV plans to develop a platform that would provide affordable and conveniently located co-living spaces for students and young professionals.
NEW DELHI: Mid market chain Lemon Tree Hotels has formed a joint venture with an affiliate of Warburg Pincus, a global private equity firm focused on growth investing, to create a co-living platform. Lemon Tree said the JV marks Lemon Tree Hotels' entry into an adjacent but new business segment focusing on the development of institutional-grade rental housing accommodation serving both students and young working professionals across major educational clusters and key office markets in India.

Following Warburg Pincus' partnerships in China and Hong Kong, with entities such as Mofang, Nova, Ziroom and Weave, this investment represents the first co-living platform which the firm has backed in India. An affiliate of Warburg Pincus and Lemon Tree Hotels Limited will hold 68% and 30% stake, respectively in the JV, with the balance 2% to be held by Lemon Tree chairman Patanjali Keswani.

The JV partners will initially invest Rs 1,500 Crore in equity over a period of time followed by an additional infusion of Rs 1,500 crore in equity at the option of the partners, to develop rental housing projects through a combination of greenfield purpose-built properties, refurbishment of existing under-managed/stressed commercial and residential assets taken on lease/acquisition basis as well as management of existing for-rent accommodation projects. The platform aims to provide affordable and conveniently located co-living spaces for students and young professionals. The JVs projects will also include shared spaces like living room, gym and well-equipped cafeterias in order to provide its residents with a high-quality and full-service co-living accommodation.

Lemon Tree said the JV has developed a pan-India strategy and is building a dedicated team to execute its plan, making it one of the very few players with a combined focus across student housing and young professional co-living segments, while undertaking customized developments to meet the evolving needs of the millennial population in India.

Keswani said: "We are delighted to once again partner with Warburg Pincus at an early stage of this exciting new business opportunity, which will allow Lemon Tree Hotels to move into a segment which is nascent but closely aligned to our existing target customers and which is expected to see tremendous growth, going forward. Driven by the lack of quality accommodation and high rental/capital costs across key Indian cities relative to salary levels, the rise of co-living spaces is a part of the evolution of the sharing economy that will continue to gain significant traction."
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