BAT Wants to Divest ITC Hotels Stake, Awaiting RBI Approval

UK cigarette maker British American Tobacco Plc (BAT) plans to sell its entire stake in ITC’s demerged hotel unit, ITC Hotels, and is currently awaiting approval from the Reserve Bank of India (RBI). The move was revealed during the company’s earnings call last month.

BAT, which is also the largest shareholder in ITC, holds a 15.29% stake in ITC Hotels. The hospitality arm was demerged from ITC Ltd in January this year and officially listed on stock exchanges on 29 January.

“On ITC Hotels, I have said before, and I continue to say, that strategically speaking, we don’t intend to be shareholders in a hotel chain in India or outside India. But the fact is there are some bureaucratic steps that need to be completed, given that our shareholding dates back to the early 1900s,” BAT Chief Executive Tadeu Marroco told analysts.

He added, “Sometimes things take longer for us to unlock those shares and get the right approvals from the right forums—in this case, the central bank in India—in order to be able to transact.”

Since any sale of BAT’s stake would involve a foreign company divesting shares in an Indian firm and repatriating the proceeds, RBI approval is required.

In the previous quarter, Marroco had also stated that the firm would divest its stake in ITC Hotels “at the right moment.”

“BAT has no interest in becoming a long-term shareholder of a hotel chain in India. Consequently, at the right moment, when we decide the best time to maximise shareholder value, we will divest. We will use the proceeds to ensure that we reach the leverage corridor of 2.5 to 2 by 2026,” Marroco said in May.

Under the demerger plan, ITC shareholders own 60% of the unit, while the remaining 40% is held directly by ITC. As a result, BAT’s 15.29% stake in ITC Hotels counts as foreign direct investment, making it the largest public shareholder after ITC’s promoter holding of 39.87%.

BAT has also been gradually reducing its stake in ITC, securing RBI approval for two block deals—3.5% in February 2024 and 2.5% in May 2025—bringing its holding down from 29% to 22.93%.