Aga Khan fund rules out buyout of TPS in share trade-off deal

The Aga Khan Fund for Economic Development (Akfed) has ruled out the takeover of TPS East Africa in share swap deal that would have seen the fund increase its shareholding in the Nairobi bourse listed hotelier by 10.45 per cent.

TPS East Africa (TPSEA) is set to acquire 79.19 per cent of TPS Uganda — which is owned by Akfed and NSSF Uganda — in a share swap deal.

TPSEA, which runs Serena chain of hotels, will get the controlling stake in TPS Uganda and in turn cede a stake equivalent to the value of the Ugandan entity in its shareholding in a deal set to be concluded by next year.

“Akfed, however, does not intend to make a takeover offer of TPSEA and has accordingly applied to the Authority for an exemption,” said a statement from Akfed on Friday.

Takeover plan


Akfed owns 32.4 per cent of TPSEA, and Capital markets regulations presume that an investor has takeover intentions if they acquire more than five per cent of a listed company within a year and own more than 25 per cent.

The investor is expected to issue a notice within 24 hours after deciding on the share acquisition of the takeover plan, but can also seek exemption from the Capital Markets Authority from this rule.

Akfed will acquire 32, 346, 160 additional shares worth Sh1.27 billion based on TPSEA present share price of Sh39.50 at the Nairobi Securities Exchange (NSE).

TPS Uganda currently owns five star city hotel Kampala Serena Hotel, and acquired a new property, Lake Victoria Serena Resort, in 2009 — which will now be incorporated in the TPSEA chain of hotels.

Regional expansion

The NSE listed hotelier — which runs has been expanding regionally in a bid to diversify risk and cut reliance on the Kenyan market.
It recently acquired a 20 per cent stake in the 230-room, five-star Royal Palm Hotel from Movenpick Hotels and Resorts in Tanzania at an undisclosed price.

It is also set to acquire a stake in Hotel Source du Nil, a five-star hotel in Burundi being sold by the government and plans new facilities in Rwanda.
TPSEA half-year profit dropped 35 per cent to Sh120.4 million on account of low arrivals due to the Eurozone crisis.

Apart from regional expansion, TPSEA plans to upgrade the Nairobi Serena Hotel in a bid to retain and grow its corporate business clientele.

The diversification also comes at a time when the local market has attracted international hotel chains such as Belgium’s Rezidor Hotel Group and Starwood Hotel & Resorts, which holds the Sheraton brand.