OYO, the leading hotel chain in India, is in advance talks with Lovely Professional University (LPU) to acquire its student accommodation assets. After a series of investments in co-working spaces, it will be the first venture of OYO in the student residential facilities.
As per the media reports, the deal will cost $200 million. The transactions details are not finalized yet but reportedly the deal could be in form of a lease. OYO is looking at a long term agreement which can last to multiple decades. On the other hand, LPU’s promoter – Mittal family, is eyeing to generate liquidity and future fund expansion by selling off the assets.
Located 20 Kms away from Jalandhar in Punjab, Lovely Professional University (LPU) is considered one of the largest in the country with a huge campus. The university boasts of a range of student accommodations ranging from dormitories to single occupation rooms, which can house 25-20K students.
Besides, the facility also has apartments for senior students or faculty. These accommodations, which also have gyms and an indoor stadium, can cost INR 30K to INR 1.6 Lakh per resident student.
Interestingly, there were other bidders, such as HDFC, Good Host Spaces, too for this asset but reportedly OYO beat them all.
According to a report by ET, the gross revenue of these facilities is more than $30 Mn whereas the net operating cost is $23 Mn, as far as the latest financial year is considered.
If the deal becomes a success, OYO could become the largest owner of student accommodation assets in the country. However, LPU management will continue to hold the right to decide the rent and charges of the accommodation to be collected by OYO. Though, both the parties want the accommodation to be affordable for students.
