India's Sahara Group buys iconic Plaza Hotel

Flamboyant Indian billionaire Subrata Roy has finalised the purchase of New York's iconic Plaza Hotel for $575 million, a statement said Wednesday.

Roy's Sahara, a top sponsor of Indian cricket and motor racing, has also bought the luxury Dream New York from New York hotelier Vikram Chatwal for $220 million, India's Economic Times reported. Both deals closed Monday.

The hotels lie close to Central Park and Sahara, which bought Grosvenor House hotel in London two years ago, is looking at other landmark properties to build up a luxury hotel portfolio, the Economic Times said.

Sahara is one of a clutch of Indian firms which have bought hotel properties abroad. Analysts say Indian companies see big opportunities in US and European hotel properties as the economic downturn has reduced market values.

The 223-room Plaza "was a great opportunity for the buyer to expand into a key US gateway market with the purchase of such an irreplaceable asset," said consultant to the sale, Solid Rock's President Greg Rice.

Sahara bought a 75-percent stake in the Plaza, whose guests have included Eleanor Roosevelt, the Beatles and Mark Twain, from an Israeli-owned realtor El Ad US Holdings in a deal valued at $575 million, the vendor said in a statement.

Co-owner Kingdom Holding, a leading global investment firm controlled by Saudi billionaire Prince Alwaleed bin Talal, will retain a 25-percent stake.

The purchases come as a deadline nears for Sahara to comply with an Indian Supreme Court order to refund as much as $4.5 billion it collected from 30 million small savers because it disobeyed rules in amassing the funds.

Analysts say paying the sum could impose big cash flow strains on Sahara although the company has insisted its finances are healthy.

If Sahara does not pay investors by month's end, the court told authorities to use all means to claim the money, including freezing the company's bank accounts.

Sahara, whose chief Roy is a hero to millions of Indians for his rags-to- riches story and who lives in a mansion modelled on the US White House -- only bigger -- is seeking an extension to January 31 to comply with the court order.

The company straddles finance, housing, media, entertainment, manufacturing and services and has been expanding aggressively into new sectors such as retail.

Known as a secretive company, Sahara did not make any announcement of its own on its hotel acquisitions.

Sahara, based in Uttar Pradesh state capital Lucknow, is following in the footsteps of other Indian companies such as the Oberoi Group and Indian Hotels which have snapped up hotels abroad.

Indian Hotels has recently bid $1.86 billion to acquire Orient-Express Hotels but the Bermuda-based global chain has rebuffed the offer twice so far.

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