Sri Lanka has shortlisted four local and foreign companies for the finance bidding process of the scheduled divestment process for the Hilton and Hyatt Colombo Hotels, a Ministry of Public Enterprise Development (MPED) official said.
“We have received Requests for Proposals (RFP) from 15 local and foreign companies to act as transaction advisor (TA) in the scheduled divestment process and among them, we have shortlisted four local and foreign companies for the finance bidding process”, he said.
The Government will announce the shortlisted parties shortly and we will begin the finance bidding process as soon as possible, he asserted.
According to the Ministry, there were 11 world-renowned investment banking units and companies and four local investment banking and accounting companies who submitted their RFP to act as TA.
They were: Fenek Limited, Dubai, UAE; PWC, Singapore; Colliers International (Singapore) PTE Ltd Singapore; Mayer Brown JSM Singapore PTE, Singapore; Acuity Partners (Pvt) Ltd, Colombo; RKF Hotel Experts GMBH, Austria; HotelivatePvt Ltd. India; Savills (Singapore) PTE Ltd; Lazard Asia Ltd. Singapore; Deloitte Touche Tohmatsu India, LLP, India; CIMB Investment Bank Berhad, Malaysia with association with NDB investment bank Sri Lanka; Capital Alliance Partner Ltd, Colombo; Jones Lang Lasalle Property Consultants (India), Pvt Ltd, India; YSP Advisors (Pvt) Ltd. Colombo; and KPMG, Colombo.
Meanwhile, speaking to Ceylon FT, a few of the above interested parties said there was already global and local interest for the Hilton Colombo and Grand Hyatt hotels.
“We are ready to give maximum benefit to the Sri Lankan Government through this divestment process, if selected”, they said.
In early January, MPED called for proposals to act as advisor to seek suitable investors for the purchase of the Government ownership of Hilton Colombo and Grand Hyatt Colombo, for which the Submission of Proposals ended on Friday (16).
“The GoSL is delighted to have this overwhelming response from international parties. It may indicate the trustworthiness of the Sri Lankan economy”, Divestment and Restructuring Consultant, Manjula de Silva told Ceylon FT.
The GoSL Budget Speech in 2016 identified two Companies that come under the management of the MPED as a non-strategic enterprises, in which the divestment of the Government ownership may be considered: Hotel Developers (Lanka) PLC, which owns the Hilton Hotel in Colombo and Canwill Holdings (Pvt) Ltd, owner of the Grand Hyatt Colombo Hotel construction project. GoSL intends to restructure the ownership of these two non-strategic assets and divest Government stakes in the two companies.
He said there were no prior formal valuations about this divestment process, but the TA is expected to provide advice with regard to the divestment of the Government shares in the said companies.
GoSL wishes to offer a strategic and controlling stake of 51% in Hotel Developers (Lanka) PLC to a qualified and reputed investor selected through a competitive process. The shortlisted entities will be offered the opportunity to enter a competitive bid, on a special board of the Colombo Stock Exchange (CSE), to purchase the 51% stake introduced on an ‘all-or-nothing’ basis. It is intended to release the balance stake to the public through an Offer for Sale on the CSE after allocating some shares to employees. The Government also wishes to offer 100% of the shares held in Canwill Holdings (Pvt) Ltd – owned by SLIC, LGL and EPF – to a qualified and reputed investor selected through a competitive process.
Hotel Developers (Lanka) PLC is fully owned by the Secretary to the Treasury. The company operates the Colombo Hilton, a 350-room 5-star hotel in Colombo on a 6.92-acre property leased by GoSL. The firm has entered into a management contract with Hilton 2 International, which comes up for renewal in 2019. Hilton International has indicated its desire to renew the contract.
Canwill Holdings (Pvt) Ltd is owned by three State entities: Sri Lanka Insurance Corporation Ltd (SLIC, 45.95%); Litro Gas Lanka Ltd (LGL, 27.03%); and Employees Provident Fund (EPF, 27.03%). Since Litro Gas is 100% owned by SLIC, the latter has effective control over Canwill Holdings (Pvt) Ltd and owns the Grand Hyatt Colombo construction project through its fully-owned subsidiary, Sinolanka Hotel and Spa (Pvt) Ltd.
The Grand Hyatt project, nearing its estimated completion in 2018, will operate as a 5-star hotel with 458 rooms and 100 serviced apartments once completed. The hotel occupies a land extent of 2.32 acres, a majority of which is leased from GoSL. The management contract entered into with the Hyatt Group expires 20 years after the start of operation.(