Saturday, 26 May 2018
KENYA: InterContinental Hotel Nairobi Stakes Up For Sale
The commission has restarted the sale of government stakes in three luxury hotels including Hilton and Mountain Lodge.
The sale will happen through pre-emptive rights to existing shareholders, meaning existing owners of the hotels will be given the first right to buy the stakes.
This will give Sovereign Group, a fund associated with the Moi family and allies, an edge in the purchase of the 33.83 per cent government stake in InterContinental Hotel Nairobi.
Sovereign Group had 19.3 per cent stake at InterContinental Hotel Nairobi, according to a 2015 report from the commission.
Joshua Kulei, who served as private secretary to Mr Moi, Rodger Kacou and Ahmed Jibril have a combined stake of less than one per cent.
Other shareholders of InterContinental Nairobi were the Intercontinental Hotels Corporation Group (33.8 per cent) and the Development Bank of Kenya with a 12.99 per cent stake.
The Sovereign Group in 2015 informed the competition watchdog of plans to acquire the 33.8 per cent stake held by Intercontinental Hotels Corporation Group in a deal that would have upped its stake to 53.13 per cent.
The InterContinental Group Plc has been managing the 389-room hotel under a 99-year lease since April 1967.
The Privatisation Commission is seeking consultants to carry out due diligence on Hilton, Intercontinental and Mountain Lodge and six other smaller units and prepare them for sale.
The consultants will be expected to establish the financial health of the hotels and prepare contracts including share transfer agreements.
The sales were first announced in 2011 as part of a plan to help improve the State’s finances and to transfer the running of businesses to the country’s private sector.
The government has a 40.57 per cent shareholding in International Hotels Kenya, which owns the Hilton Hotel. It has a 39.11 per cent stake in Mountain Lodge, which operates under the TPS Serena brand.
The sale of the hotels comes as revenue from tourism jumped 20 per cent last year as the sector continued to recover from a series of attacks on the country a few years ago that had scared away foreign visitors.
The consultants will be expected to establish the financial health of the hotels as well as prepare contracts including share transfer agreements.
The sales were first announced in 2011 as part of a plan to improve the State’s finances and to transfer the running of businesses to the private sector.
The government has large shareholdings in a number of firms in several sectors and plans to retain stakes in strategic assets such as energy and telecoms.
The government stakes in large hotels, including a 40.57 per cent shareholding in International Hotels Kenya Limited, which owns the Hilton Hotel.
It will offload a 33.83 per cent stake in Kenya Hotel Properties Limited, which runs the InterContinental Hotel, and a 39.11 per cent shareholding in Mountain Lodge, which operates under the TPS Serena brand.
The commission has previously said the hotel sales would be through negotiations involving pre-emptive rights, which gives other shareholders in the hotels the first chance to buy the state stake.
The State owns shares in the three luxury hotels through the Kenya Tourist Development Corporation.
It has direct ownership in the other six mid-tier hotels including Kisumu’s Sunset Hotel, Golf Hotel in Kakamega, Kenya Safari Lodges, Mount Elgon Lodge, Kabarnet Hotel and Ark Limited.