Singapore Sovereign Wealth Fund GIC has Acquired 25% stake in Dutch Hotel Group CitizenM

Main Photo: The Citizen M Foyer at La Defense, Paris. In France the group is also present at Gare de Lyon, at Charles de Gaulle airport and will open three other establishments on the Champs-Elysees, in the district of Opera and Porte Maillot

Date: March 2019

Location: Europe/Global

Name: CitizenM

No. of Keys: 3773 across 15 operational hotels

Seller: Rattan Chadha, founder and Michael Levie COO, CitizenM. CitizenM’s existing shareholders APG is also committing fresh capital to help the hotel developer’s growth program. The €463bn Dutch asset manager APG has invested in CitizenM since it started in 2008.

Buyer: Singapore sovereign wealth fund GIC has acquired a 25% stake in Dutch hotel group CitizenM. The €750m investment values CitizenM at €2bn.

GIC has, or has had, stakes in a large porfolio of hotels like the InterContinental Paris, Sheraton Grande Tokyo Bay, AccorInvest and others.

This is GIC’s first hotel-related investment thus far in 2019. Last February, GIC teamed up with other international investors, including Saudi Arabia’s Public Investment Fund and France’s Amundi and Credit Agricole Assurances, to acquire a 55% stake AccorInvest, a Luxembourg-based company that owns 891 hotels worldwide.

And last August, GIC acquired a minority stake in Indian property developer Provenance Land, which built and owns the Four Seasons Hotel in Mumbai.

Established in 1981 to manage Singapore’s (as in the country!) foreign reserves, GIC is a global long-term investor with well over US$100 billion in assets in over 40 countries worldwide. They  work to secure Singapore’s financial future by investing across a range of asset classes in the public and private markets. The CEO is Lim Chow Kiat and the Chairman Lee Hsien Loong is Prime Minister of Singapore.

The company has promised to accelerate its rate of new openings, with a target of 50 hotels. CitizenM, largely European to date, aims to grow across Europe, North America and Asia.

Citizen M, the champion of affordable luxury hotels, raised €750m by bringing GIC, Singapore’s sovereign wealth fund, into its round. The transaction is intended to accelerate the pace of its openings in Europe, North America and Asia.

“We are going to double the number of projects under development from 25 to 50 new ones , ” says Robin Chadha, chief marketing officer of Citizen M and son of founder Rattan Chadha.

Together with GIC, the other two major shareholders, KRC Capital (Chadha family holding) and APG (the Dutch pension fund), will devote an additional €700 million to the acceleration of the deployment of Citizen M.

The small hotel group is mainly present in Europe (11 of the 15 establishments in its network) and makes North America (2) its priority area for expansion. “We plan to open 15 more quickly , “said Robin Chadha.

In the manner of Mama Shelter and other funky hotel groups, Citizen M intends to revolutionise the accommodation of executives on a business trip.

Launched in 2008 by Rattan Chadha, who made his first fortune with sportswear brand Mexx, the Citizen M concept is characterised by the use of design (all furniture is signed Vitra), colour and art contemporary decorating common areas and bedrooms.

The average price of these are around €90 in Europe.

On the organisational and operational side, Citizen M, like others, has removed reception desks replaced by kiosks to facilitate check in and check out.

As for the staff renamed “ambassadors” and recruited elsewhere other than from hotel schools, it is asked above all to be versatile in the manner of butlers palaces. “No difference between those who work at the bar or the room service, each takes care of the customer whatever the demand,” says Robin Chadha.

But, unlike the current trend that hotel groups give the walls of their establishments to become mere operators, Citizen M remains the owner. “It’s the assurance of being able to maintain control over our brand,” says Robin Chadha. The formula seems to work because the group, unlisted, does not publish its figures but declares a gross operating margin of 50%.

THPT Comment: Great move to help CitizenM achieve it’s expansion plans, globally.

First Seen: Les Echoes

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