With banks becoming cautious towards lending in general, hotel companies, which are in need of capital to fund their expansion plans, will benefit from the hike in the 15 per cent trigger limit for an open offer to 25 per cent under the new takeover rules.

A number of private equity (PE) funds, such as Jetty Capital, Ferry Holdings and Bay Capital among others, which have 10 per cent to just under 15 per cent equity stake in companies like Sayaji Hotels, Blue Coast Hotels and Sterling Holiday Resorts will be able to infuse fresh money in these companies without triggering an open offer.

“With interest rates going up, raising funds in the domestic market is an issue for hotel companies. So in such a situation, diluting equity is the best way to raise funds. It is the most costly type of fund-raising option. But the risk associated is very low, because hotel companies do not have to return the money baised,” Vineet Hetamasaria, head of research, Pinc Research, said.

“The new norms will be beneficial for the promoters. If there is fightfor hiking stake, then the stock will move up,” said Himani Singh,a hotel analyst with Elara Capital.

Bay Capital, which holds 16.11 per cent stake in Sterling HolidayResorts, will be increasing its stake by 2.95 per cent after thecompany allots 19.5 lakh warrants at an exercise price of Rs 75 per warrant to it. Bay Capital will be infusing Rs 14.62 crore in the company through this process.

Indus Hospitality Fund had acquired over 15 per cent stake in Sterling Holiday through preferential allotment for around Rs 28 crore in July 2009. Although this triggered an open offer for another 20 per cent as per the Indian takeover code, it did not receive a good response for the offer.

Sterling Holiday Resorts has plans to raise Rs 120 crore through issuance of equity shares and warrants on preferential basis to fund its expansion plans in India and overseas. “The infusion of more capital into the company will enable Sterling to expand its footprint and fund ongoing growth plans,” Siddharth Mehta, chairman of Sterling Holiday Resorts, said.

Companies like Reliance Industries and ITC, which hold 13.78 per cent and 14.98 per cent stake, respectively, in PRS Oberoi-promoted East India Hotels, will now be able to raise their stake to 25 per cent.

Hotel Leelaventure can also invite ITC to raise its stake from 12.95 per cent to help the company in its expansion plans, said Singh of Elara Capital. Vadodara-based Sayaji Hotels also has plans to raise funds through a rights issue to fund its expansion plans.

Jetty Capital and Ferry Holdings, which hold 12.97 per cent and 13.11 per cent stake, respectively, in Blue Coast Hotels and Resorts, can raise their stake in to 25 per cent, without triggering an open offer.