{"id":612371,"date":"2023-12-21T00:00:00","date_gmt":"2023-12-21T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/12\/21\/talaat-moustafa-group-now-owns-a-39-stake-in-the-states-historic-hotels-company\/"},"modified":"2023-12-21T00:00:00","modified_gmt":"2023-12-21T00:00:00","slug":"talaat-moustafa-group-now-owns-a-39-stake-in-the-states-historic-hotels-company","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/12\/21\/talaat-moustafa-group-now-owns-a-39-stake-in-the-states-historic-hotels-company\/","title":{"rendered":"Talaat Moustafa Group now owns a 39% stake in the state\u2019s historic hotels company"},"content":{"rendered":"

That\u2019s a wrap on historic hotels sale:<\/strong> Talaat Moustafa Group (TMG) now officially owns a 39% stake in a group of historic hotels, Prime Minister Moustafa Madbouly said during a presser (watch, runtime: 23:45<\/a>). That wraps a transaction that has been months in the making.<\/p>\n

In detail: <\/strong>TMG inked the final agreement with the Sovereign Fund of Egypt (SFE) and the Egyptian General Company for Tourism and Hotels (EGOTH), giving its subsidiary Icon Investments 39% ownership and full management rights of a group of seven historic hotels \u2014 branded under the umbrella of Legacy Hotels. <\/p>\n

TMG will become majority owner: <\/strong>The agreement will eventually see TMG's Icon hold a 51% stake in the hotels, bringing the transaction\u2019s value to USD 800 mn, to be financed through Icon\u2019s internal resources and an upcoming capital increase, TMG said in a statement (pdf)<\/a>. An \u201cinternational strategic investor\u201d will acquire a USD 882.5 mn minority stake in Icon via a capital increase, giving it an indirect stake in the hotels. This will result in \u201cone of the largest foreign direct inflows into Egypt in the last several years.\u201d <\/p>\n

Sound smart #1: <\/strong>SFE CEO Ayman Soliman has long advocated that buyers be given the right to up their stakes through the injection of fresh capital that gives companies the cash they need to grow. <\/p>\n

What\u2019s in the portfolio? <\/strong>Seven historic properties, including the Cairo Marriott Hotel<\/strong> in Zamalek, Marriott Mena House<\/strong> next to the Giza Pyramids, Steigenberger Hotel El Tahrir<\/strong> Cairo, Steigenberger Cecil<\/strong> Alexandria, Sofitel Legend Old Cataract<\/strong> Aswan, M\u00f6venpick Aswan<\/strong>, and Sofitel Winter Palace<\/strong> Luxor. <\/p>\n

The sale will help bring in some desperately needed hard currency into the country<\/strong>, with the full value of the transaction set to be paid in USD. <\/p>\n

A bigger stake and higher price tag:<\/strong> The initial transaction agreement<\/a> announced in July saw Icon taking a 37% stake in the company for USD 700 mn. <\/p>\n

Where is the money going?<\/strong> The state will use USD 150 mn in proceeds from the transaction proceeds to overhaul and develop the seven hotels, TMG CEO Hisham Talaat Moustafa told Asharq Business (watch, runtime:<\/a>1:24<\/a>). \u201cThe purpose of this investment into Legacy is to develop and upgrade these hotels to bring their operational efficiency to higher levels, enabling them to attract higher quality of tourism to Egypt,\u201d the TMG statement said. <\/p>\n

Icon's\u2019s portfolio post acquisition: <\/strong>With this new batch of hotels under its belt, Icon now owns 15 hotels across Egypt and around 5k rooms. <\/p>\n

ADVISORS- <\/strong>Talaat Moustafa made a point of thanking our friends at EFG Hermes (including EFG Holding Group CEO Karim Awad) as well Hani Sarie-Eldin<\/a>, Sarwat Abdel Shaheed<\/a>, Mohamed Abou Sho<\/a>ka<\/a>, and Ernst & Young<\/a>.<\/p>\n

Sound smart #2<\/strong>- <\/strong>10-20% of the proceeds from privatization transactions typically go to the state\u2019s treasury, while the rest is returned to the ministry or agency to reinvest, a government source told Enterprise. If the selling price is settled in foreign currency, the central bank exchanges it for the ministry to use it as it wishes.<\/p>\n

A recent example: <\/strong>The sale of a stake in Eastern Company<\/a>, where the government now plans to use the bulk of the proceeds to invest in state-owned fertilizer plants.<\/p>\n

WHERE DO WE GO FROM HERE?<\/strong><\/p>\n

The program so far: <\/strong>The government has so far secured about USD 5.6 bn <\/strong>from selling stakes in 14 state-owned companies, Madbouly noted. <\/p>\n

What are those 14? <\/strong>A senior government official we spoke with listed them as follows:<\/p>\n