Thai JV snatches UK’s Jupiter Hotels for $244m
04 SEPTEMBER 2015 8:29 AM
Following last month’s purchase of Kew Green Hotels by Chinese capital, a second U.K.-based hotel-management company, Jupiter Hotels, has been scooped up, this time via a Thai joint venture.
REPORT FROM EUROPE—The debt and entire share allocation of United Kingdom hotel company Jupiter Hotels Limited has been bought by two Thai companies for £160 million ($244.4 million).
Jupiter counts 26 Mercure-branded properties, four Dragonfly Hotels-branded properties as well as the Cromwell Hotel Stevenage and The Talbot Hotel listed on its website. The 26 Mercure hotels are managed by AccorHotels, for which the franchise agreement will expire in 2031, according to Thai news source The Nation.
The acquisition is a joint venture of Thai Industrial & Engineering Service Public Company and Fico Holding U.K., which is part of Fico Corporation, in turn part of conglomerate Evolution Capital that is controlled by the Thai Srichawla family. The family owns Red Planet Hotels, a chain of 24 budget hotels in Thailand, Indonesia, Japan and The Philippines.
According to Evolution Capital’s website, Red Planet has a holding company in the U.K. but, as yet, no operating hotels or pipeline.
The new buy, according to The Nation, will be managed under a new joint venture called Newco, where will sit Jupiter Hotels’ 27.1 million shares with a value of £1 ($1.53) per share.
A call from Hotel News Now to Jupiter Hotels was passed on to Patron Capital Partners, its former owners, along with West Register, under the Patron Jupiter Holding wing.
West Register, a multi-platform debt-restructuring portfolio held by Royal Bank of Scotland, and Patron Capital bought the 26 properties in September 2011 from Jarvis Hotels Limited, which was in administration. Two other banks, HSBC and Bank of Ireland, owned part of the debt on the portfolio.
The U.K. government still retains a considerable stake in RBS, which it bought in 2008 for £45 billion ($68.7 billion) to prop the bank up during the recession.
Patron Capital declined to comment on the deal, while Thai Industrial & Engineering Service Public Company and Evolution Capital had not returned calls by press time.
More deals to come
The deal comes less than a month after Chinese firm HK CTS Metropark Hotels Company Limited bought Kew Green Hotels, InterContinental Hotels Group’s largest hotel-management partner in the United Kingdom. The reputed acquisition price of £400 million ($619 million) was the largest single U.K. buy by Asian capital in terms of cost and inventory.
Klaus R. Rauter, CEO and managing director of Phuket, Thailand-based business consultancy Mai-BS Hospitality Group, said despite the Thai economy going through a few growing pains of late, the deal probably had more to do with common sense business practices than it did the political and image problems Thailand is experiencing following the 17 August Bangkok bombing.
“Tourism is suffering a little in Thailand, with occupancy down, so therefore people with money here are open to spreading risk, not having all their eggs in one basket. Buying in a safe destination such as the U.K. makes senses,” Rauter said.
This joint venture might not be the last Thai money to seek a home in Europe, he added. HNN asked if there were other companies likely to show their hands soon.
“Yes, definitely, I can think of three or four asset-management companies here with huge money, which is mainly private family money,” Rauter said.
Jesper Palmqvist, area director Asia/Pacific at STR Global, the sister company of HNN, did not discount Rauter’s theory but said he had seen little in the past three to six months that would suggest the beginnings of an urgent exodus of capital.
“I have not seen a different mentality of late. The guys with the money, if anything, are cautious, waiting to find the right deal. With this case, it probably just made sense to the parties involved,” he said.
Palmqvist added that the Thai Industrial & Engineering Service Public Company, whose core business is property and construction, is an economic powerhouse with many assets in China and other Asian countries. It is listed on the Bangkok Stock Exchange (stock symbol: T) with a market capitalization of 1,247 billion baht ($34.7 billion), according to Wright Investors’ Service.
In regard to the United States’ private equity holds in the two deals—the former owners of Jupiter Hotels being Patron Capital; the former owners of Kew Green Hotels being Goldman Sachs and Texas Pacific Group, which bought it in 2012—both came as no surprise, according to Elizabeth Winkle, managing director of STR Global.
“A four-year hold period is pretty in line with what we’ve been seeing, but what is important in the (Patron) deal is that it was a debt-equity swap but now is all equity,” she said.
“The sale has seen an increase in value and a solid return, and there is still potential upside,” Winkle said, adding that U.K. buys still are a value proposition.
“The pound sterling in relation to major currencies, including the U.S. dollar, is the lowest it has been in recent history, but it still is strong,” she said.