Sahara pays $800 mn for NY hotels; Indian investors wait for refund

Running against time to refund a whopping Rs 24,000 crore to its investors, the Subrata Roy-led Sahara Group has paid $800 million (Rs 4,400 crore) to buy two iconic hotels in the New York city–Plaza Hotel and Dream New York.

The Supreme Court had on 31 August asked the group to repay the money it had collected from over 30 million people who had invested in optionally fully convertible debentures issued by two group firms. The repayment was be done through the capital market regulator Sebi within three months of the court order.

The group is paying$570 million fora 75 percent stake in Plaza Hotel and another$220 million forDream Downtown, which is bought from celebrated New York hotelier Vikram Chatwal.

The Sahara Group is reportedly looking to lap up more hotels in New York to spruce up its portfolio of luxury hotels.

But its appetite for spending on new hotel acquisitions is puzzling as the group has sought an extension of deadline from SATto submit documents of the investors to SEBI.

If Sahara doesn’t pony up, the Supreme Court has instructed the Sebi to use all legal means to claim the cash, including seizing Sahara property and freezing bank accounts.

However, Subrata Roy is not the only Indian businessman scouting for prized hotel assets abroad, whose valuations are on the decline as their financials weaken due to crippling economic slowdown.

Tata-owned Indian Hotels Company Limited recently bid for acquiring a controlling stake in the Bermuda-based hospitality firm, Orient Express Hotels for $1.86 billion. Even though the bid was rejected, IHC is likely to make a counter offer as the acquisitions will give the Tatas an image makeover overseas and an edge up over its Indian peers too.