Qatari Diar buys 40% stake in Fairmont Raffles

The real estate arm of the Qatar sovereign wealth fund, Qatari Diar, has acquired a 40 percent stake in the hotel group Fairmont Raffles in a deal believed to be valued at $847 million.

QD Hotel and Property Investment – a subsidiary of the sovereign fund’s principal real estate investment entity Qatari Diar – teamed up with Cayman Islands-based investment firm Voyager Partners to close the deal, according to a statement issued today.

Kingdom Holding Company, which took the hotel group private in a $5.5 billion deal with Los Angeles-based Colony Capital in 2006, added that Voyager and Qatari Diar paid part cash and “other considerations” for the stake. The firms will also allow Fairmont Raffles Hotels International to manage a number of its hotels in the future.

KHC, owned by billionaire Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, will now be the second largest shareholder in Fairmont Raffles, followed by Colony as the third largest.

I am delighted to welcome both Voyager and QDHP as our new and strategic partners in FRHI. Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud

Various media reports said the deal would see KHC's stake in the hotel group drop from 58 percent to 35 percent, while Colony would hold onto its 22 percent stake. A Fairmont spokeswoman said Voyager and Qatari Diar had purchased a 40 percent stake FRHI, but declined to comment on specifics. A spokesman for Colony also declined to comment.

Prince Alwaleed said Qatari Diar and Voyager should be considered “strategic partners” in Fairmont Raffles, following the “significant cash investment made”.

 

Kingdom first invested in Fairmont Raffles – which now owns and manages 123 hotels worldwide under the Fairmont, Raffles, Swissôtel and Delta brands – in 1994, taking the company private in 2006 with Colony. On its website, KHC said the hotel group would continue to sell its real estate assets “to focus on its management business and will also seek to expand its management portfolio”.

Last April, KHC and Colony reportedly put the famous Singapore Raffles hotel up for sale for $450 million, after a June 2008 deal valued at $650 million fell through. Colony bought the Raffles Hotel, along with 40 other Raffles and Swissôtel properties, for a combined $1 billion in 2005.