Minor forms strategic partnership in Africa with Sun
August 19, 2014 01:00
By The Nation
Minor International will take key stakes in eight properties in Africa for Bt2 billion from Sun International and form a strategic partnership with Sun to own and operate the African assets.
Sun International will dispose of 50 per cent of its interest in Zambia and 80 per cent of its interests in Botswana, Namibia, Lesotho and Swaziland to Minor.
This will take Minor’s effective shareholding to 50 per cent in the Zambia properties, including the 173-room Royal Livingstone and 212-room Zambezi Sun; 64 per cent in the 196-room Gaborone Sun in Botswana; 80 per cent in the 173-room Kalahari Sands in Namibia; 37.5 per cent in the Lesotho properties, including the 158-room Lesotho Sun and 105-key Maseru Sun; and 40.5 per cent in the Swaziland properties, which are the 149-room Royal Swazi and 202-room Ezulwini Sun.
The partnership intends to leverage both companies’ core strengths, where Sun will continue to manage the casino operations while Minor will assume hotel management, marketing and distribution.
The proposed transaction and partnership are in line with Sun’s strategy to optimise its capital allocation and resources. Sun can remain invested in the African assets but with responsibility for the casino component only, as well as partner with Minor in other African opportunities that have a casino element.
Sun will be able to give greater focus to opportunities identified in Latin America and Asia, where Minor has a strong presence, as further key growth markets for its core casino business.
Minor will commit its pro rata share of new capital expenditures to realise the revenue potential of the African assets, giving Sun more room to consider capital investment opportunities elsewhere.
Sun will use proceeds from the disposal of the assets to reduce its debt and provide capacity for its strategic expansion initiatives.
The proposed transaction allows Minor to invest and operate in Botswana, Lesotho, Namibia, Swaziland and Zambia, where it believes in secular demand growth for quality accommodation.
Minor will bring its hospitality expertise, together with operating and distribution capabilities, to capture the growth potential of the African assets.
The proposed transaction also fits with Minor’s expansion plans in Africa, where it owns eight luxury game lodges and resorts in Kenya and Tanzania under the Elewana Collection, and five hotel projects in Mozambique under the Anantara and Avani brands.
Graeme Stephens, chief executive of Sun International, said yesterday that the proposed transaction provided an opportunity for Sun to create a strategic alliance with Minor, a leading hospitality and leisure operator that brings not only hotel management and marketing expertise but also an ability and desire to invest in the assets under its management.
With Minor now taking the bulk of management responsibility for the African assets, Sun and its management team can increase their focus on the core casino assets that are driving its financial performance and strategy.
“Sun will remain invested in the partnership and will continue to benefit in the future growth of these African assets under the new alliance with Minor,” he said.
William Heinecke, chairman and CEO of Minor, said that over the past few years, Minor had strategically expanded its hospitality business into many regions, and Africa was one of the continents where it saw substantial growth potential and put its focus on, as evidenced by a number of acquisitions and partnerships in the region.
“Minor is excited by this latest acquisition, which will augment its growth strategy in Africa and will further introduce our Anantara and Avani brands in the region. We look forward to seeing our partnership with Sun International further flourish in the future,” he said.
Dillip Rajakarier, CEO of Minor Hotel Group, said that starting with the existing African assets, the partnership intended to explore other hotel and gaming opportunities that might arise in Africa and Asia, where Minor would manage the hotel component and Sun the casino component.