Shares of Lemon Tree Hotels Limited are expected to remain in focus on Monday after the company’s Board of Directors approved a major composite scheme of arrangement aimed at restructuring the group into two clearly differentiated platforms. The decision was taken at the board meeting held on January 9, 2026, following recommendations from the Reorganisation Committee, the Audit Committee and the Committee of Independent Directors.
Under the proposed reorganisation, Lemon Tree Hotels will transition into a pure-play, asset-light hospitality platform focused on hotel management, brand and loyalty, distribution and digital services. At the same time, Fleur Hotels Limited will emerge as a large-scale hotel ownership and development company with end-to-end in-house capabilities and a strong growth pipeline supported by fresh capital.
As part of the transaction, the board has approved the execution of a Share Purchase Agreement involving Lemon Tree Hotels, APG Strategic Real Estate Pool N.V., Coastal Cedar Investments B.V., an affiliate of Warburg Pincus, and Fleur Hotels. Under this agreement, Warburg Pincus will acquire APG’s entire 41.09% stake in Fleur Hotels prior to the completion of the composite scheme. The board has also approved a new Shareholders’ Agreement between Fleur Hotels, Lemon Tree Hotels, promoter Patanjali Govind Keswani, Spank Management Services Private Limited and Warburg Pincus.
The reorganisation will be executed in multiple stages. Initially, Lemon Tree Hotels will merge its wholly owned subsidiaries Carnation Hotels and Hamstede Living with the parent company. Subsequently, four other wholly owned subsidiaries—Oriole Dr Fresh, Sukhsagar Complexes, Manakin Resorts and Canary Hotels—will be merged with Fleur Hotels in exchange for the issuance of Fleur shares to Lemon Tree.
In addition, twelve hotels will be demerged into Fleur Hotels, including eleven operational properties and one under-construction hotel in Shimla. The transaction also includes Lemon Tree’s development team and capabilities, exclusivity over future hotel development, ownership and leasing activities, and an investment in a hotel under construction in Shillong through a subsidiary. All hotel assets housed under Fleur will operate under new hotel operating agreements with Lemon Tree, effective from April 1, 2026.
Following the scheme becoming effective, shareholders of Lemon Tree Hotels as on the record date will directly and indirectly own 73.99% of Fleur Hotels. Of this, Lemon Tree shareholders will directly hold 32.96%, Lemon Tree Hotels will retain a 41.03% stake, and Warburg Pincus will own the remaining 26.01%. These shareholding figures exclude any potential dilution arising from the proposed primary capital infusion by Warburg Pincus.
Fleur Hotels is also set to receive a primary equity investment of up to ₹960 crore from Warburg Pincus, to be infused in tranches as required. This capital is expected to accelerate Fleur’s expansion and strengthen its balance sheet. The partnership marks the second strategic collaboration between Lemon Tree Hotels and Warburg Pincus, following the private equity firm’s earlier investment in Lemon Tree in 2006.
Post-reorganisation, Fleur’s owned hotel portfolio will expand significantly, growing from 24 operating hotels with 3,993 keys to 41 hotels with 5,813 keys. Lemon Tree Hotels will continue to operate and manage these properties under its asset-light model, while also managing and franchising its third-party owned portfolio across India and overseas.
The composite scheme is subject to approvals from shareholders, regulators and the National Company Law Tribunal. Once all approvals are in place, Fleur Hotels will be listed as a separate entity on Indian stock exchanges, with the entire process expected to be completed within 12 to 15 months. Morgan Stanley acted as the exclusive financial advisor to the transaction.