AccorHotels is selling more than half of its property business, AccorInvest, to a group of sovereign and institutional investors.
Through the deal, AccorHotels will relieve itself of 55 percent of AccorInvest, which it is selling for roughly $5.3 billion. This majority holding will go to investors such as the Public Investment Fund of Saudi Arabia, Singapore’s GIC Private, Credit Agricole Assurances, Colony NorthStar and Amundi.
The French firm separated AccorInvest from its primary business model last year in order to attract new investors. In a release circulated following the sale, Sebastien Bazin, chairman and CEO of AccorHotels, said the strategy was a success, and the sale will be used to fuel the future expansion of AccorHotels’ portfolio. The AccorInvest hotels included in the sale will be operated by AccorHotels under 50-year contracts, alongside 15-year renewal options, for luxury hotels, while hotels in the midscale and economy segments will be subject to 30-year contracts.
“These agreements represent a key milestone for the Group. Following the separation of AccorInvest into a stand-alone legal entity last summer, we are now gathering a round-table of leading investors, on the basis of a valuation that fully reflects its global leadership and the quality of its assets, while building a long-term relationship between AccorHotels and AccorInvest,” Bazin said in a statement. “These elements were essential to make this operation a success for all stakeholders: Teams, partners, as well as present and future shareholders of both entities. The entry of new shareholders and the deconsolidation of AccorInvest will provide AccorHotels with substantial leeway to enhance our dynamic growth and innovation strategy and create value for shareholders. For its part, AccorInvest will take advantage of its new powerful shareholders’ support, as well as a strengthened financial structure to execute its roadmap and continue to reinforce its portfolio of assets.”
During a call with investors, Bazin said AccorHotels will be using the sale as an opportunity to return 1.35 billion euros in share buybacks to investors within two years. Bazin also suggested that the company could be willing to further reduce its holding in AccorInvest in the future.
AccorInvest currently employs nearly 30,000 workers across 27 countries, and contains a portfolio of nearly 891 hotels.