In a strategic move, Kenya’s government and Hilton have jointly put the iconic Hilton Hotel in Nairobi’s central business district up for sale, signaling a new chapter for the historic property.
According to businessdailyafrica.com, the hotel has been closed and unused for over a year, prompting this decision to sell the stake for approximately Sh2 billion.
The government and Hilton International Limited on Tuesday separately invited expressions of interest from investors willing to acquire the 100 percent equity stake in the hotel.
According to the most recent disclosures covering the financial year that ended in June 2022, the government holds a 40.58 percent stake in International Hotels (Kenya) Limited, the entity that owns the iconic Hilton Hotel, or a respective 5.8 million shares.
The Kenya Development Corporation (KDC), which is the custodian of State shares in hotels and lodges, valued the government’s stake in the hotel at Sh850.6 million as of June 2022. Going by this valuation, it means that the combined stake of the State and Hilton International Limited in the hotel would be valued at Sh2.09 billion, with the latter holding 59.42 percent of shares in the International Hotels (Kenya) Limited.
Interested investors, who may be individuals, firms, and consortiums, are obligated to fully acquire the entire shareholding of both the government and Hilton International Limited.
Bidders will also be expected to demonstrate their financial capacity to buy out the hotel’s current shareholders in full.
For the State, whose sale of stake is being undertaken by the Privatization Authority, investors shall be expected to provide a bid security of Sh10 million or its US dollar equivalent at the current exchange rate.
“In line with the provisions of the Privatisation Act 2023, all relevant laws, regulations, and the constitutive instruments of the International Hotels (Kenya) Limited, the government of Kenya through the Privatisation Authority invites expressions of interest for the purchase of 40.58 percent government shareholding,” the Privatisation Authority stated in a notice on Tuesday.
Both invitations for expression of interest will remain open until May 7, 2024.
Hilton Nairobi fronts four major streets in the capital’s central business district- Mama Ngina Street, Watalii Lane, City Hallway, and Simba Street.
The iconic hotel came up in 1969 and had been under the management of Hilton Nairobi Limited up until December 31, 2022, when the hotel closed its doors indefinitely.
The sale of the iconic hotel charts a new path for the establishment which has remained closed and unutilised since closing shop over a year ago.
Previously, KDC had been expected to take over the assets and liabilities of the hotel as part of parastatal reforms by the then Jubilee administration.
The corporation was tasked with wooing investors into putting money in the hotel alongside similar State-backed establishments such as the Elgon Lodge in Kitale, Sunset Hotel, Mombasa Beach Hotel, and Golf Hotel.
Hilton Hotel now becomes the sixth State-linked hotel to be put up for sale this year after the Kenya Safari Lodges, Mt. Elgon Lodge Limited, Golf Hotel Limited, Sunset Hotel, and Kabarnet Hotel.
The Privatization Authority invited consultants to provide transaction advisory services that involve the review of financials, industrial analysis, commercial, operational, regulatory, and legal for the KDC-controlled hotels.
The government has been ramping up its privatisation scheme this year having set sights on selling its stake in the Kenya Literature Bureau (KLB), the Kenyatta International Convention Centre (KICC), the Kenya Seed Company Limited, Kenya Pipeline Company, and the New Kenya Co-operative Creameries (New KCC).
The National Oil Company of Kenya, the Numerical Machining Complex, the Kenya Vehicles Manufacturers Limited, and Rivatex East Africa Limited are also on the privatisation list alongside Kwal Holdings East Africa Limited (KHEAL), the parent firm of the Kenya Wine Agencies Limited (KWAL).
The fate of the Intercontinental Hotel in which the government holds a 33.83 percent stake through the Kenya Hotel Properties (Intercon NBI) Limited, however, hangs in the balance, with no disposal plans made public yet.
Intercontinental Nairobi began operations in 1967 and shut down a year before Hilton Nairobi’s indefinite shutdown.
