Indian Realty Tycoons struggles for U.K.’s Marriott Hotels.

The race to acquire 42 Marriott hotels in the U.K. put up for sale last year by the Royal Bank of Scotland seems to have entered a crucial stage. After attracting a host of potential investors, the three bidders in the final lap are reportedly all property groups with Indian connections.

Until now, the front-runner was believed to be India’s Sahara Group which, in December 2010, acquired the landmark Grosvenor House Hotel for close to $750 million from RBS. But a report from The Times, U.K. Thursday suggested that Sahara may no longer be so strongly in the reckoning. According to the report, a little-known Indian property firm called Blue Mountain Real Estate has emerged as the preferred bidder with a $1.2 billion offer.

When Forbes contacted Janak Vaswani, co-founder and director of Blue Mountain in Mumbai, he denied any knowledge of the bid. “We have nothing to do with this deal, “he said. The group is linked with London’s RP Capital Group and its Jersey-based India Blue Mountain Fund is aimed at “investments in India’s hospitality sector not elsewhere,” said Vaswani.

Sources familiar with the sale said that the likely bidder is Blue Coast Hotels, owned by the Suri family in Delhi. Blue Coast owns a Park Hyatt Hotel in Goa and has upcoming hotels in Delhi for which it has tied up with MGM Mirage Hospitality for its MGM Mirage and Skylofts brands.

The Suris are perhaps better known for Morepen Laboratories, their pharma business which has seen its ups and downs. The combined market cap of Blue Coast and Morepen, both listed on the Bombay Stock Exchange, is under $50 million. The Suris themselves in the past have been investigated by the federal investigator for alleged financial irregularities. “How they will fund this acquisition is a mystery, “said a Mumbai banker.

The third bidder in the fray is of Indian origin but based in Singapore: RB Capital, founded by Kishin RK, son of property tycoon Raj Kumar, co-owner of Royal Brothers, a prominent real estate group. RB Capital’s hotel arm has two Holiday Inn Express Hotels under development in Singapore and Kuala Lumpur and it is keen on an overseas expansion. The privately-held firm, which has built a $1.6 billion portfolio in six years, is believed to have bid just over $1 billion for the Marriott properties. RB Capital, which plans to list in the near future, may well turn out to be the dark horse in this race.

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