The sale of government shares in three luxury hotels, including the Nairobi InterContinental and Hilton, has hit a snag after partner shareholders placed bids that were below the set reserve price.
The Privatisation Commission said it is going back to the drawing board after current owners of InterContinental, Hilton and Mountain Lodge, who have a first right to acquire the government stakes, made offers that were below the pre-determined market value of the high-end hotels.
Existing agreements mean the hotels could not be sold in the open market until partner shareholders were given first priority.
“Sale was by pre-emptive rights. Offers made (were) below commission’s valuation/price,” said the agency.
The commission declined to reveal the reserve price for each of the facilities and how much it expects to raise from the sale of the luxury hotels. “Work on-going hence information remains confidential.”
Parliament in December 2012 approved a government plan to divest from the hospitality industry by selling its stakes in hotels, lodges and beach resorts; but the move has been beset by multiple hiccups on valuation.
The government, through the State-funded Tourism Finance Corporation (TFC), holds 40.57 per cent of Hilton Nairobi, InterContinental Nairobi (33.8 per cent) and a 39 per cent stake in Serena Mountain Lodge.
It means InterContinental Hotel’s shareholders, including the Sovereign Group — an investment fund associated with the family and allies of former president Daniel arap Moi, which has a 19.3 per cent shareholding — proposed prices below market prices.
Other shareholders of InterContinental Nairobi who were offered the government stakes are the Intercontinental Hotels Corporation Group (33.8 per cent) and the Development Bank of Kenya has a 12.99 per cent stake.
Joshua Kulei, who served as private secretary to Mr Moi, Rodger Kacou and Ahmed Jibril have a combined stake of less than one per cent.
The InterContinental Group Plc has been running and managing the 389-room InterContinental Nairobi under a 99-year lease since April 1967.
TFC, formerly known as Kenya Tourist Development Corporation, will also offload its entire 40.57 per cent stake in four-star Hilton Hotel Nairobi. Hilton Nairobi, features 287 rooms and suites, five restaurants, British-themed jockey pub and a pool restaurant.