GLOBAL - Dutch asset manager APG has acquired a minority stake in Lemon Tree Hotels and entered into a joint venture with the Delhi-based group to develop a portfolio of mid-market hotels in India.
APG, which manages around €299bn of assets on behalf of Dutch pension funds, has acquired a 6% direct stake in Lemon Tree Hotels.
The other large shareholders in Lemon Tree Hotels remain its founder Patu Keswani and the global private equity group Warburg Pincus.
In addition, APG has signed an agreement with Lemon Tree Hotels to set up a hotel-development joint venture called Fleur Hotels Private.
Fleur Hotels Private will invest more than Rs 2,000 Crores (€284.3m) to develop and own 4,500 rooms by end of 2016.
APG's combined investment in the joint venture and Lemon Tree Hotels represents a total of Rs 650 Crores.
Daan Van Aert, head of non-listed real estate Asia for APG, said: "Asia is a region of significant expansion for us, and we seek strong, like-minded partners to access this region's real estate transformation across all sectors.
"We view China and India as the major growth engines of the global economy and will expand our footprint further in these markets.
"India's consumption-led economy provides incremental diversification benefits to our portfolio."
Sachin Doshi, senior portfolio manager at APG, added that there was "significant" room for growth in the supply-constrained, mid-scale hotel segment in India.
He said: "With one of the world's fastest growing economies, strong domestic consumption, rapid urbanisation and young demographics, India presents an
attractive long-term investment opportunity for us."
Back in 2010, APG announced it would increase its Asian real estate exposure by €1bn within the next five years.
At the time, Van Aert said the fund planned to invest in residential properties in emerging markets, such as China and India.
He added that APG was seeking to profit from rising housing demand in these markets as the middle class continued to grow.