Mid-market hotel chain Lemon Tree Hotels has plans to raise Rs 10bn ($124m) through initial public offering (IPO).

This IPO will see Warburg Pincus sell 50% of its stake in the Lemon Tree Hotels. The offer opens on 26 March.

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Lemon Tree Hotels IPO will see upto 185 million shares being sold, which translates to 23.59% of the share capital.

Each equity share is in the range of Rs 54 to 56. Warburg will divest 25% of its stake in Lemon Tree; however, the promoter company will not divest its 30% interest.

Lemon Tree has 45 hotels with almost 4,700 rooms across 28 cities. The Delhi-based company operates three brands – budget brand Red Fox, mid-scale Lemon Tree, and Lemon Tree Premier.

Most of these properties are operated on their own whereas the rest of them are a mix of managed, leased back and branded.

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Last year, the hotel group‘s average occupancy rate was 65%.

Lemon Tree Hotels chairman and managing director Patanjai Keswani was quoted by Moneycontrol.com as saying: “By 2020-21, as per predictions made by Howarth, there will be a complete shortage of branded hotels rooms and more so in the mid-market space.

“The Indian traveler is fast moving to mid-market segment where he seeks quality and value-for-money stay. We may add another brand if required at a later stage and that could be in the resort space.

“We already have the Lemon Tree Resorts brand with an operational hotel in Goa. This brand may get developed later. Our long term intention in to get into management and brand model and become asset light.”