Subrata Roy arrives at the Supreme Court on March 4, 2014 (photo: Reuters)
Selling trophy assets at fancy prices takes time and the right image, both of which business tycoon Subrata Roy does not have much of. Lodged in South Asia’s largest jail for the past 5 months, he needs to raise Rs. 10,000 crore ($1.6 billion) to get bail. The Supreme Court, which had initially given him 10 working days to August 19 to talk to potential bidders for his three luxury hotels – including the Grosvenor House in London and the New York Plaza – gave Roy an extension of 15 days on Thursday to secure a deal, but warned him that this would be the last extension.
The 66-year old is the chairman and 'managing worker' of Sahara India, a conglomerate with interests in financial services, hotels, media and real estate. His group is well known as the former main sponsor of India’s cricket team and also owns part of a Formula 1 team.
Its main business is selling financial products to small investors, mostly in smaller towns and rural areas. It was two such bonds that were later declared illegal by capital markets regulator SEBI and the group was ordered in 2012 to repay the investors with interest.
Sahara claimed it has repaid most investors, though this is contested by SEBI and the Supreme Court. The court has estimated Sahara's liability at up to 350 billion rupees ($5.7 billion).
The flamboyant businessman – who would earlier have been seen with cricketers and Bollywood stars – was jailed in March after failing to appear at a contempt hearing in the long-running dispute.
Last week the Sahara chief was provided with a 600-square foot office-cum-cell inside Tihar Jail, equipped with computers and video conferencing to talk to potential buyers. He is also allowed to receive visitors to try to sell or mortgage the hotels.
According to Reuters, Roy and his two associates, who have also been jailed, sleep in a tiny adjoining room, get meals from the prison canteen and have to use shared toilets.
Roy’s lawyer, S. Ganesh, told the Supreme Court on Thursday that the Sahara chief is holding "very effective" negotiations with buyers and the group has signed a preliminary accord for the three hotels.
To secure bail, Roy will have to put up Rs. 10,000 crore ($1.6 billion), half in cash and the remainder in a bank guarantee. His lawyer told the Supreme Court that Sahara is also considering mortgaging its Aamby Valley township project in Maharashtra.
International buyers will be attracted by Grosvenor House, the 494-room hotel opposite Hyde Park and near Buckingham Palace. In 2010, Sahara paid £470 million ($790 million) for this hotel.
Then there is the landmark New York Plaza Hotel - a 107-year-old luxury hotel that overlooks Central Park. Jointly owned with the Saudi Arabia-based Kingdom Holdings, Sahara bought the Plaza for about $570 million in 2012. The third hotel it hopes to sell is the Dream Hotel in midtown Manhattan.
Buyers will definitely push for a steep discount, given that Roy needs the money quickly. Yet property consultants told Reuters that selling the hotels from inside a prison was unlikely to affect the interest in the prestigious London and New York hotels.
"The properties are quite iconic and would be sold at the right price," said an unnamed international property consultant. "Whatever Roy does, he does it in style."