Sailing to the Maldives

Seeing this growth, Chinese PE firm Sailing Capital set its sights on a luxury resort developer - Soneva Group, which operates the Soneva Fushi resort on the island of Kunfunadhoo. The courtship coincided with President Xi Jinping's visit to the Maldives in September, which brought with it a string of infrastructure initiatives.

Last week, Sailing announced it would take a significant minority stake in Soneva Group. It is the largest Chinese investment in the Maldives to date, but Chris Roling, Hong Kong-based managing director and partner at the PE firm, expects more capital to follow. Now the country is on China's political radar, there will be billions of dollars for houses, bridges and airport facilities "which help our investment as well," he says.

Built by Eva and Sonu Shivdasani in 1995, Soneva is the oldest resort operator in the Maldives. The company owns a resort in Thailand under the Soneva Kiri brand, but Sailing is primarily interested in Soneva Fushi. The group also developed the Six Senses Resorts and Spas brand before exiting the assets in 2012.

Soneva is profitable but requires a strategic partner to reach the next stage of development. Sailing will support the company in expanding the existing resort and attract more Chinese tourists through leveraging its relationships with large domestic tourism agencies.

Meanwhile, the bulk of the new capital will go towards developing a new Soneva resort on a different island. The building process is expected to take 14-18 months. As part of this development, Sailing will provide additional funding for a few residential villas. Rather than situated on the beach, these new properties will be over water, as a better fit for Chinese tastes.

"We think the returns on the hospitality side and the residential side will be very attractive," Roling says. "We also intend to market the brand much more aggressively and put in more Asian features, not exclusively to Asian tourists but probably more than Soneva has branded itself in Asia in the past."

Sailing's holding period for investments is five years. In the later stages, the private equity firm will look to expand Soneva outside of the Maldives, with a particular focus on China. It also plans to strengthen the resort operator's sustainability profile by promoting environmentally friendly processes and raising ecological awareness.

The investment comes out of Sailing's cross-border fund, which reached a first close of RMB12 billion in 2012. Given the investor base comprises strategic investors, there is a natural first port of call when the PE firm decides it is time to exit the asset.

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• Topics
• Consumer
• Expansion
• Greater China
• South Asia
• Consumer
• China
• sailing capital
• Growth capital