Lazard Asia, MTI Consulting to be appointed transaction advisor to sell Hilton and Grand Hyatt hotel

The National Policies and Economic Affairs Ministry has announced that the Cabinet Appointed Procurement Committee has recommended Lazard Asia Ltd., Singapore in association with MTI Consulting to be awarded the contract to act as an international transaction advisor for the sale of State-owned Hilton and Grand Hyatt Hotels.

The Public Enterprise Development Ministry called for Request for Proposals (RFPs) on 5 January to act as adviser to seek suitable investors for the purchase of Government ownership in Hilton Colombo and Grand Hyatt Colombo.

National Policies and Economic Affairs Ministry in its website said: “We are pleased to inform you that the Cabinet Appointed Consultant Procurement Committee has recommended Lazard Asia Ltd. of Singapore in association with MTI Consulting to be awarded the contract. 

They will act as an international transaction advisor for the sale of Government ownership in Hilton and Grand Hyatt Hotels.”

The appointed transaction advisor is expected to advise the Public Enterprise Development Ministry on its strategic options with respect to the divestment of its shares in the two companies described above. The advisor will be responsible for marketing the assets to seek and identify suitable investors for both investment opportunities in Hilton and Grand Hyatt Hotels, sourcing reputed potential investors with a capacity and willingness to invest in each of these properties.

According to the Public Enterprise Development Ministry, the 15 companies which submitted RFPs for Transaction Advisor for Hilton and Hyatt Colombo Hotels include Fenek Ltd., Dubai; PWC, Singapore; Colliers International (Singapore) PTE Ltd., Singapore; Mayer Brown JSM Singapore PTE, Singapore; Acuity Partners Ltd., Colombo; RKF Hotel Experts GMBH, Austria; Hotelivate Ltd., India; Savills (Singapore) PTE Ltd.; Lazard Asia Ltd., Singapore; Deloitte Touche Tohmatsu India, LLP, India; CIMB Investment Bank Berhad, Malaysia; Capital Alliance Partner Ltd., Colombo; Jones Lang Lasalle Property Consultants (India), Ltd., India; YSP Advisors Ltd., Colombo; and KPMG, Colombo. 

In the 2016 Budget the Government identified two companies that come under the management of Public Enterprise Development Ministry as 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 Ltd., owner of the Grand Hyatt Colombo Hotel construction project. The Government intends to restructure the ownership of these two non-strategic assets and divest the Government stakes in the two companies.

The Government strategy is to offer a 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 general public through an ‘offer for sale’ on the CSE after allocating some shares to employees.

Canwill Holdings Ltd. is owned by three State entities includes Sri Lanka Insurance Corporation Ltd. (SLIC 45.95%), Litro Gas Lanka Ltd. (LGL 27.03%) and Employees’ Provident Fund (EPF 27.03%). As Litro Gas is 100% owned by SLIC, the latter has effective control over Canwill Holdings Ltd. and owns the Grand Hyatt Colombo construction project through its fully-owned subsidiary, Sinolanka Hotel and Spa Ltd.

The Grand Hyatt project is nearing completion (expected in 2018) and will operate as a five-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 Government. The management contract entered into with the Hyatt Group expires 20 years after the start of operation.