South Africa’s Southern Sun Africa (SSA) is disposing of its 75.55% majority shareholding in Southern Sun Ikoyi Hotels, one of Nigeria’s largest business hotels. Nigerian entities own the balance of 24.45%.

The deal is valued at about $30.4 million comprising $29.1 million in shares and another $1.3 million in shareholder loan claims, the group reported.

The South African owners acquired majority shares of Southern Sun Ikoyi Hotels in 2013 in a deal that valued the hotel at about $65 million at the time.

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

The Kasada Capital Management, which also includes the hospitality business, is a private equity firm that focuses on investing in the hospitality sector in Sub-Saharan Africa.

The investment firm was launched in 2018 with the backing of the Qatar Investment Authority, the sovereign wealth fund of the State of Qatar, and Accor, a world-leading augmented hospitality group.

The Kasada Group’s hotels are operated under the banner of Accor’s wide range of internationally renowned brands.

In April 2019, the Kasada Group closed on its maiden fund, Kasada Hospitality Fund L.P. (registered in Mauritius), with equity commitments of over USD 500 million.

According to sources with knowledge of the transaction, Southern Sun Africa experienced major financial losses from all its hotel assets particularly in Southern Africa due to the Covid-19 lockdowns.

Due to the impact of the losses, the company is now focused on restructuring its operations and capital resulting in the need to spin off some of its best performing offshore assets to pay down debts.

The company explained in an earnings report and also gave the following reasons.

The successful implementation of the disposal 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 provides SSA with sufficient cash resources to offset Offshore Debt in Mozambique amounting to US$26.6 million, thereby eliminating the forex risk to the group.

The Sale Agreement also provides for the Purchaser to release the group from its guarantee obligations in respect of the external debt of Ikoyi.

Upon conclusion of the deal, the hotel will be rebranded as part of the Accor Group of Hotels.

The Accor Group is a French-owned multinational hospitality group that manages and franchises hotels, vacation spots, resorts, etc. They are also the largest hospitality company in Europe and among the top 6 in the world.

Some of the hotel brands they own which may be familiar to Nigerians are Novotel, IBIS, Movenpick, Mecure. Nairametrics understands the Ikoyi Hotel might be rebranded as Novotel which is part of its Midscale group of hotels. IBIS is economy while Movenpick belongs to its Premium class.

The deal completion is subject to the approval of the Federal Competition and Consumer Protection Commission in Nigeria and the Security & Exchange Commission.