Japan Leisure Hotels has markedly scaled back its fundraising via a float on London's Alternative Investment Market.
The company, which is a closed-end investment fund registered in Guernsey, had hoped to raise up to £100m but now this is just £3m.
The proceeds from the float will still be enough to enable the company to complete the purchase of five so-called Japanese love hotels. The properties are costing £19m and are currently trading under the Bonita brand, operated by New Perspective.
There are an estimated 25,000 love hotels in Japan, an Asian phenomenon that can also be found in countries like South Korea. The hotels offer short stays of as little as an hour, targeting couples seeking the privacy they cannot obtain in their often overcrowded homes.
The estimated size of the love hotel business in Japan is put at $35bn a year with up to 2% of the Japanese population using them each day.
The business has in the past few years attracted the interest of a number of investment firms, including blue chip overseas players, as they seek to capitalise on what can be underperforming assets that can offer superior returns when properly managed.
For its part, Japan Leisure Hotels believes that the absence of any significant chains presents a particular opportunity. The company, of which Alan Clifton will be non-executive chairman, expects to float next week. The adviser is Shore Capital.