Duet Group, the London-based alternative asset management firm, has launched an investment, development and asset management company dedicated to hotels in sub-Saharan Africa, it has announced.
The firm launched Duet Africa Hotels in a joint venture with Bouygues Batiment International, a subsidiary of Bouygues Construction Group, the global construction firm, to develop, operate and ultimately exit a portfolio of mid and upscale business hotels in the region.
To fund the venture, Duet has simultaneously launched a dedicated fund for which it expects to raise $200 million of equity before the end of the year. Both Duet and Bouygues will commit capital to the fund, from which net returns of 20 percent IRR are expected.
Target countries for the venture include: Nigeria, Ghana, Ivory Coast, Ethiopia, Tanzania, Mozambique, Kenya and Uganda. The firm said it was targeting greenfield developments or those with significant refurbishments in standalone or mixed-use format with offices, residential or retail components.
Duet said it had been encouraged to invest in sub-Saharan business hotels by “the region’s sustained economic growth, the current favorable hotel demand-supply imbalance and the high barriers to entry.” It added it was attracted too by Africa’s consumer markets, its natural resources, increased intra-African trade and connectivity, all of which will support the region’s growth in business travel.
Henry Gabay, co-founder and chief executive officer of Duet Group said: “We are excited about establishing this unique venture to tap a clear growth opportunity in the hotel sector in sub-Saharan Africa that is supported by strong trade and consumer trends.”
Gabay predicted the firm’s partnership with Bouygues would see it overcome the challenges of developing hotels in Africa. He said: “One of the biggest challenges to the hotel sector in Africa is the ability to build on time and budget. Working with Bouygues Batiment International is the perfect solution to these challenges.”
Duet’s investment is its first in African real estate but the firm has been active in the region via other investment markets. It has invested $600 million through public and private equity investments over the past six years. “Investments in hotels and real estate are a natural extension of our investment philosophy for the region,” Gabay said.
Duet has more than $5.5 billion of assets under management, managed by 75 professionals across offices in London, New York, Dubai, New Delhi and Accra.