Khazanah may pick up Amanresorts

Amanresorts operates villas and resorts in 15 countries worldwide, having expanded from its core territory in Southeast Asia to other parts of Asia, Africa, and the US with a new resort in Utah. DLF, which acquired Amanresorts in 2007 as part of a planned expansion into hotels and hospitality, struck a deal with the chain’s founder, Adrian Zecha, to take 50% of the business, picking up subsequent stakes that now total 97%.

However, the heavily indebted company has been in talks with potential strategic buyers since 3Q09, but hitherto failed to secure bids to approach its $400 million 2007 purchase price. DLF wants to shed some INR5000 crore ($1.08 billion) of debt, chiefly by offloading non-core assets. AVCJ sources referred to the group’s recklessness in diversifying into trophy assets like Amanresorts, as well as in pursuing the resort hotels sector – “traditionally a dreadful investment.”

Appetite for deals in the hospitality space is quite low, according to AVCJ sources, and DLF is unlikely to receive better offers in the short term. “There’s very little activity,” Mischa Moselle, Managing Editor at Asian Hotel & Catering Times, told AVCJ, reporting almost no significant hospitality M&A trades in the region over 2009-10.

Business prospects for Amanresorts are less attractive in the short term, but improving and likely to recover further. “The luxury end suffered the most, because if people traveled, they went down one class,” Moselle, noted, adding that demand, “has bounced back in the past few months, a lot quicker than anyone expected.” Furthermore, he continued, the high-end luxury segment in Asia Pacific looks set to outperform Western peers. “There’s a growing number of customers from within Asia Pacific.” Other sources warned, however, that Khazanah may fall victim to the allure of prestigious assets, just as DLF did.

Amanresorts and Khazanah have an existing relationship born out of the Malaysian SWF’s partnership with the hospitality group and Symphony International Holdings Ltd., which backed Zecha in his first boutique resort, Amanpuri, in Phuket in 1998. Khazanah sought to build an Amanresorts property in Iskandar, Johor, though the project has not to date materialized.

Goldman Sachs and JPMorgan are advising DLF on the deal. Khazanah conceded it has been in discussions with Amanresorts on various projects, but declined to comment further.

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• Topics
• Southeast Asia
• Consumer
• Buyouts
• Anil Thadani
• Symphony Asia Holdings
• Goldman Sachs