South Africans to sell stake in Southern Sun Ikoyi Hotels to Kasada Group for $30.4m

The South African company Southern Sun Africa (SSA) is selling its 75.55% majority stake in Southern Sun Ikoyi Hotels, one of Nigeria’s largest business hotels. Nigerian entities hold the remaining 24.45%.

The deal is valued at around $30.4 million, including $29.1 million in stock and an additional $1.3 million in shareholder receivables, the group reported.

South African owners acquired a majority stake in Southern Sun Ikoyi Hotels in 2013 in a deal that valued the hotel at around $65 million at the time.

Who buys?

The hotel is being acquired by Kasada Albatross Holding (the buyer), which is a subsidiary of Kasada Hospitality Fund LP.

  • Kasada Capital Management, which also includes the hotel business, is a private equity firm that focuses on investing in the hotel sector in Sub-Saharan Africa.
  • The investment company was launched in 2018 with backing from the Qatar Investment Authority, the sovereign wealth fund of the State of Qatar, and Accor, a global leader in augmented hospitality.
  • The hotels of the Kasada group are operated under the banner of Accor’s wide range of internationally renowned brands.
  • In April 2019, Kasada Group closed its first fund, Kasada Hospitality Fund LP (registered in Mauritius), with capital commitments of over $500 million.

Why does Southern Sun Africa sell?

According to sources familiar with the transaction, Southern Sun Africa suffered significant financial losses across all of its hotel assets, particularly in Southern Africa, due to the Covid-19 lockdowns.

Due to the impact of the losses, the company is now focusing on restructuring its operations and capital, forcing it to divest some of its best-performing offshore assets to pay off debt.

The company explained in an earnings report seen by Nairametrics also gave the following reasons.

  • The successful implementation of the divestment would result in the reduction of the group’s US dollar denominated debt (offshore debt) through the deconsolidation of Ikoyi’s external debt of US$12.8 million and would provide SSA with resources of sufficient cash to offset the offshore debt in Mozambique amounting to 26.6 million dollars, thus eliminating the exchange risk for the group.
  • The Sales Agreement also provides that the Purchaser releases the group from its guarantee obligations with respect to Ikoyi’s external debt.

What will the hotel be called?

Upon completion of the deal, Nairametrics understands that the hotel will be rebranded as part of the Accor group of hotels.

  • The Accor Group is a French multinational hotel group that manages and franchises hotels, vacation spots, resorts, etc. They are also the largest hotel company in Europe and among the top 6 in the world.
  • Some of the hotel brands they own that may be familiar to Nigerians are Novotel, IBIS, Movenpick, Mecure. Nairametrics understands that Hotel Ikoyi could be rebranded as Novotel, which is part of its mid-range hotel group. IBIS is economical while Movenpick belongs to its Premium class.

Completion of the transaction is subject to the approval of the Federal Competition and Consumer Protection Commission in Nigeria and the Security & Exchange Commission.

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