LarrainVial has been working with large investors since the last month of May, in order to present them with its new product, the Hotel Investment Fund. With it, the company hopes to raise US$100 million to buy three well-known hotels in Chile: the Ritz Carlton, Crowne Plaza and the Intercontinental, as reported by Diario Financiero newspaper, citing sources familiar with the matter.
Seemingly, according to the same sources, the agreements to buy the aforementioned hotels have already been closed, and thus the fund will need to have all the capital raised by the end of July, although 50% of the money has already been committed.
Furthermore, the newspaper adds that the project managers, the same currently controlling the Hotel Intercontinental, would put down US$20 millionwhilst 30 would come from other investors. The fund, which is looking to invest close to US$230 million, would therefore already dispose of 140 million in financing.
As far as the current valuation of the above-mentioned establishments is concerned, the Intercontinental is valued at US$112 million, whilst the Ritz and the Crowne Plaza would suppose a disbursement of US$63 and US$53 million respectively.
Apart from these three hotels, there may be interest in acquiring a fourth or even a fifth one, although this would take place in the second phase of the fund, which in turn would mean a further increase in capital. The names being whispered are Marriot and the W.
The Meridia Capital investment fund – which also has hotels in Paris, Mexico and Brazil – paid US$86 million when it bought both hotels in Chile five years ago; about 30 million less that what the LarrainVial fund now contemplates paying for them.
Finally, the newspaper highlights that 80% of the management company, which will additionally offer resources, will be in the hands of the current Intercontinental partners: Oscar Biderman, founding partner and the hotel’s Controller, as well as Jorge Breitiling, also a shareholder, and the current General Manager, Rolando Uauy. Alongside them will be the partners of the private equity boutique Gamma Capital, with 20% of the management.