The government has kicked off the sale of its stake in five hotels, including the Kenya Safari Lodges, Mt Elgon Lodge Limited, Golf Hotel Limited, Sunset Hotel, and Kabarnet Hotel. The Privatisation Authority yesterday invited consultants to guide the disposal of the Kenya Development Corporation (KDC) controlled hotels.
This comes weeks after the Cabinet approved the sale of six State-owned enterprises, the expansion of the country’s hospitality industry through private capital.
“The authority requires transaction advisory services that involve the review of financials, industry analysis, commercial, operational, regulatory and legal for the KDC-controlled hotels,” the Privatisation Authority said in a tender call.
Other shareholders of the Kenya Safari Lodges & Hotels will have pre-emptive rights to buy the remaining shares of the hotel chain from KDC, failure to which the sale of the shares shall be done through an open tender.
A preemptive right is a provision to existing owners in a corporation to purchase newly issued stock before it is offered to others. The right is meant to protect current shareholders from dilution in value or control.
The Kenya Safari Lodges and Hotels Limited incorporates the Mombasa Beach Hotel, Ngulia Safari Lodge, and the Voi Safari Lodge.
The sale of shares in Mt Elgon Lodge Limited, Gold Hotel Limited, and Sunset Hotel are expected to be conducted via an open tender while the disposal of Kabarnet Hotels Limited will be done via the sale of assets.
According to the KDC’s annual report for the fiscal year ended June 2023, the development finance institution disclosed 5.2 million units of shares representing direct/effective shareholding in the five hotels.
The value of the shares rounded off to Sh671.9 million with the bulk of value tied in the Golf Hotel Limited at Sh608.9 million.
The Privatisation Authority is expected to rely on a business valuation/ share equity valuation report from the sought-after consultant to determine the execution price in the sale of the five hotels.
“In this respect, the advisors will be expected to build an appropriate financial model for use in the valuation of the companies. Based on the valuation, propose a share price that will assist the authority in implementing the transaction,” the Privatisation Authority added.
