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Lemon Tree and Warburg Pincus Enter into a JV to Form a Co-Living Platform

  • 31 January 2019

Lemon Tree Hotels has formed a Joint Venture (JV) with an affiliate of Warburg Pincus, a leading global private equity firm focused on growth investing, to create a co-living platform.

The JV marks Lemon Tree Hotel’s 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.

An affiliate of Warburg Pincus and Lemon Tree Hotels Limited will hold 68 per cent and 30 per cent stake, respectively in the JV, with the balance 2 per cent to be held by 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.

Commenting on the formation of the JV, Patanjali (Patu) Keswani, Founder, Chairman and Managing Director, Lemon Tree Hotels Limited, said, “... 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. Our purpose-built developments will offer efficient and community-oriented living solutions in a hassle-free environment for our residents through a combination of unique product design and diversified service offerings. We look forward to working closely with Warburg Pincus and leveraging their successful experience in helping create market leading platforms in the shared accommodation space in other parts of Asia.”

Anish Saraf, Managing Director, Warburg Pincus said: “India has a large addressable rental population across students and young professionals which is expected to grow significantly as a result of rapid urbanization, increasingly unaffordable housing prices/rentals and shortage of on-campus housing infrastructure... We are excited to partner for a second time with Patu and his team and believe that this JV is well-positioned to become a leading for-rent accommodation provider in India, given its access to significant capital as well as support from Lemon Tree Hotel’s proven design/development capability and existing on-ground infrastructure across the country. We look forward to working with Lemon Tree Hotels to build a best-in-class team and scale-up the platform as well as build a strong consumer brand in the Indian co-living space.”

The platform aims to provide affordable and conveniently located co-living spaces for students and young professionals, who are increasingly looking to be part of a vibrant community with like-minded individuals. The JV’s 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.

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.

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