Sale of London’s landmark Grosvenor House takes Indian flavour

Adar Poonawalla ©Rosie Hallam

The sale of London’s landmark Grosvenor House hotel could become an all-Indian affair, as detained tycoon Subrata Roy weighs a £550m bid from the Poonawallas, one of the country’s wealthiest business families, with interests from vaccines to horse stud farms.

Mr Roy’s Sahara conglomerate bought the Park Lane property for £470m in 2010 as part of a string of global hotel purchases, only to see his business empire struggle amid a battle with regulators that led to his arrest for contempt of court earlier this year.

The industrialist has since been trying to sell his three most prominent hotel assets – the Grosvenor House and the Plaza and Dreams Downtown hotels in New York – an effort initially conducted from his prison cell, until India’s Supreme Court court granted periods of day release to conduct negotiations earlier this week.

Adar Poonawalla, son of billionaire Cyrus Poonawalla, told the Financial Times that his family had made a £550m offer for the five-star, 494-room Mayfair hotel as part of a bidding process that is understood to involve investor groups linked to the governments of Qatar and Brunei.

Cyrus Poonawalla is India’s 10th richest man according to Forbes magazine, with a $5.7bn fortune amassed largely through his family-owned Serum Institute, one of the world’s largest vaccine makers.

Poonawallas – so called because of their base in the western city of Pune, known as Poona during British imperial rule – are also a fixture of India’s business aristocracy. The family own a 200-strong stable of racehorses, a stud farm, and one of the country’s most extensive sports car collections.

Adar Poonawalla said his family aimed to purchase the Grosvenor House if Mr Roy failed in a bid to sell all three of his properties to a single buyer.

“We know he [Mr Roy] would prefer to sell all of them together, probably to the Qataris ... and all three of them are a bit rich for my budget,” he said.

Mr Roy is selling his hotels to meet a Rs100bn ($1.7bn) bail charge, as part of a battle with Indian regulators over the 2008 issuance of $4bn worth of bonds to Indian retail investors, many of them impoverished farmers. Indian regulators claim the company broke capital market rules by calling the bond issue a “private placement” to avoid regulatory scrutiny.

This is a unique opportunity, a marquee asset on Park Lane, and something like that just doesn’t come up very often

- Adar Poonawalla

Mr Roy has denied wrongdoing. A spokesman for Sahara could not be reached for comment.

Last month India’s Supreme Court cited documents valuing the Grosvenor House at $850m (£500m), with the Plaza and Dreams Downtown estimated to be worth $570m and $243m each.

Mr Poonawalla said his £550m offer, first reported by India’s Economic Times newspaper, was based on the “tremendous scope” that existed to increase revenues at the property. He added that the bid would complement his family’s developing real estate portfolio, which includes a Ritz Carlton property in Pune, but also stemmed from personal considerations, given that he and his father were frequent visitors to London.

“I come to the UK quite often, I studied there ... we know how to make it work,” he explained. “This is a unique opportunity, a marquee asset on Park Lane, and something like that just doesn’t come up very often.”

Horses and race cars: emblems of an Indian dynasty

Adar Poonawalla

A taste for flamboyant motor cars and thoroughbred racehorses marks out the Poonawallas as one of India’s best-known business families. But the heir to their fortune says his ancestors were not always as fortunate, writes James Crabtree in Mumbai.

“My great-grandfather owned a lot of real estate in what was then Poona, and the name kind of stuck, when the locals called him 'Poonawallas',” says Adar Poonawalla, chief executive of the family’s Serum Institute vaccine business.

“But that money was divided between many children, so my dad began with little ... he started Serum with just $10,000 in capital,” he explains.

The privately owned group churned out 1.2bn does of vaccines ranging from MMR to polio last year, making it one of the world’s largest such manufacturers by volume.

Its profits have helped Cyrus Poonawalla expand his empire into property and industrial manufacturing, as well as a stud farm, which is used to subsidise a love of horses.

The family is notably prominent in Indian racing circles, especially in Pune and Mumbai, where Cyrus Poonawalla, pictured, is often seen trackside on big race days.

Although they come from India’s traditionally low-profile Parsi business community, the Poonawallas are also comfortable with their rising prosperity, says author and branding expert Suhel Seth.

“They are part of new India’s monied elite, who are super rich, and not afraid to flaunt that, although they also use their money well in terms of philanthropy,” he says.

As to the possible purchase of London’s Grosvenor House hotel: “It’s a good business,” Mr Seth says, “but they want bragging rights too ... and what better bragging rights than a prime piece of property in Mayfair?”

Adar Poonawalla says it was links to London that prompted his father to contemplate the acquisition from embattled tycoon Subrata Roy, however, rather than looking at one of Mr Roy’s other two New York-based luxury properties.

“The Grosvenor House is the most profitable, it is the biggest, and it is in London,” he says. “Being in India, New York is just too far way to think about, while we go to London all the time ... it makes more sense.”

Source: Financial Times