Sovereign wealth funds, Singapore's GIC and Saudi Arabia's PIF have joined forces with French investors Credit Agricole Assurances and Amundi as well as US asset manager Colony NorthStar to take a majority share in AccorInvest, the hotel ownership division of French hospitality giant AccorHotels.
AccorHotels first announced in January last year that it was entering discussions with potential investors to give up control of the division to strengthen the company's financial position and allow HotelInvest to expand.
Under the terms of the preliminary agreements, AccorHotels will initially sell 55% of AccorInvest for €4.4 bn in cash. The consortium of investors has been granted exclusivity after making binding undertakings to carry out the transaction.
Sébastien Bazin, Chairman and Chief Executive Officer of AccorHotels, said that the operation will provide AccorHotels 'with substantial leeway to enhance its dynamic growth and innovation strategy and create value for shareholders'.
'Following the separation of AccorInvest into a stand-alone legal entity last summer, we are now gathering a round-table of leading investors, on the basis of a valuation that fully reflects its global leadership and the quality of its assets, while building a long-term relationship between AccorHotels and AccorInvest,' commented Bazin.
Over time, Accor plans to sell down its remaining stake in AccorInvest to 30% and subsequently to reduce it further after a five-year lock-up period, Bazin said during a call with reporters.
AccorInvest will take advantage of its 'new powerful shareholders’ support, as well as a strengthened financial structure to execute its roadmap and continue to reinforce its portfolio of assets', added Bazin.
According to press reports, Saudi Arabia’s PIF is taking 15% share in AccorInvest while it remains unclear how much the other investors are acquiring.
Under the deal, the AccorInvest hotels will continue to be operated by AccorHotels under 50- and 30-year lease agreements including 15- and 10-year renewal options.
With close to 30,000 employees and operations in 27 countries, AccorInvest is the world leader in hotel real estate, with a portfolio of 891 hotels, with a majority located in Europe. Of the total, 324 are owned and 567 are operated under fixed or variable-rent leases.
As per year-end 2017, AccorInvest had assets worth nearly €4.8 bn and held €1.5 bn of total liabilities. It reported a profit of €71 mln over the year 2017, and posted revenues of €3.9 bn in the same period.
The transaction, which is conditional upon antitrust and regulatory approvals, will be submitted to AccorHotels' shareholders' meeting for consultation. It is expected to be finalized in the second quarter of 2018.
