Singapore sovereign wealth fund takes stake in citizenM

Amy Horsfield By Amy Horsfield
27 March 2019 | Updated 28 March 2019

GIC, the Singapore sovereign wealth fund has acquired a 25 per cent stake in affordable luxury hotel company CitizenM.

This will provide a cash boost to the owner and operator of micro-hotels, as it ramps up a global expansion.

The sovereign-wealth fund, GIC Pte. Ltd., confirmed the investment but declined to provide financial terms. Its stake brings CitizenM's enterprise value, which includes debt, to €2 billion ($2.3 billion). 

The fund and CitizenM's other investors, KRC Capital and the Dutch pension providerAPG, will also commit a further €750 million to fund the company's planned global expansion.

Rattan Chadha, founder and executive chairman of CitizenM, and founder of KRC Capital, said the company had received interest from 15 potential investors, most in the US and Canada, but agreed to a deal with GIC due to its experience in the hospitality sector.

GIC has a history of investing in hotel groups and last year it was part of a consortium that included Saudi Arabia's PIF to take a majority stake in AccorInvest, the real estate arm of European hotel group Accor, in a €4.4billion deal. In 2017 it took a $464 million stake in the 1,016 room Sheraton Grande Hotel in Tokyo.

Chadha founded CitizenM in 2008 with specifically short-stay business travellers in mind. As part of its expansion, it aims to open another 25 hotels in North America, Asia and Europe by 2020, as well as buying 10 sites for development this year.

He said that rather than open one hotel in each city, the company would take a "Starbucks approach" to growth by opening six or seven hotels in "prime cities where people are flying in and out".

Lee Kok Sun, chief investment officer of GIC's real estate arm, said CitizenM represented an "attractive value proposition of affordable luxury in urban markets".

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