Alwaleed Will Sell Fairmont Stake to Voyager, Plans to Take Company Public
April 5 (Bloomberg) -- Saudi Arabia's Prince Alwaleed bin Talal talks with Bloomberg's Erik Schatzker about his investment company Kingdom Holding Co.'s agreement to sell a stake in Fairmont Raffles Holdings International to Qatari Diar Real Estate Investment Co. in a $847 million deal. Prince Alwaleed also discusses Kingdom Holding's investment strategy and U.S. Treasury Secretary Timothy Geithner's decision to delay his report on global currencies. (Source: Bloomberg)
Saudi billionaire Prince Alwaleed bin Talal is selling a stake in Fairmont Raffles Holding International, manager of the Fairmont hotel chain, and plans to take the company public in two to three years.
Voyager Partners Ltd., based in the Cayman Islands, will buy a 40 percent stake in Fairmont Raffles. In addition, Qatari Diar Real Estate Investment Co., part of Qatar's sovereign wealth fund, agreed to provide Fairmont the opportunity to manage more properties, Alwaleed's investing company, Kingdom Holding, said in a statement. Kingdom valued the deal at $847 million. Teaming with Qatari Diar, which owns hotels, will boost Fairmont Raffle's management business, Alwaleed said in an interview with Bloomberg Television.
"They will supply us with a maximum number of hotels that will add to our income stream," Alwaleed said. "Consequently when we go public, hopefully in the next two to three years, this will add dramatic value to us."
Fairmont Raffles has about 100 hotels operating under three brands: Fairmont, Raffles and Swissotel.
Guaranteed Income
Qatari Diar will pay Fairmont Raffles $105 million if it fails to provide Fairmont with new hotel management contracts within the five years, Fairmont Raffles Chairman and Chief Executive Officer William Fatt said today in a telephone interview from Toronto.
"If Qatari Diar is slow in providing these future management contracts, then they have provided us with an income guarantee," Fatt said.
The deal with Voyager will reduce Kingdom Holding's stake in Fairmont Raffles to 35 percent from 58 percent, while Los Angeles-based Colony Capital LLC will hold 22 percent. The Ontario Municipal Employee Retirement System also owns an interest, Fatt said.
Asia is the largest area of growth for Fairmont Raffles, followed by the Middle East and Europe, he said. Any future public offer will take place outside of Saudi Arabia, Fatt said.
North American Recovery
"The industry in North America simply hasn't recovered nearly as well as other areas and there aren't the growth opportunities that exist elsewhere in the world," he said.
Riyadh-based Kingdom Holding is consolidating its business by selling stakes in some of its interests and taking full control of others. News Corp. in February agreed to buy a 9.1 percent stake in Prince Alwaleed's Rotana Group and Kingdom Holding on March 15 offered to purchase the rest of the shares in Kingdom Hotel Investments.
Kingdom Holding will use proceeds from the deal with Voyager and Qatari Diar to finance an expansion of Fairmont Raffles, Kingdom said in today's statement.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net; Erik Schatzker in New York at eschatzker@bloomberg.net
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