Aga Khan Fund to raise stake in Serena Hotels

The Aga Khan Fund for Economic Development (AKFED) is stretching its hold in TPS Eastern Africa Plc which trades as Serena Hotels.

The fund which already holds a significant 45% stake in the hotel chain is set to acquire an additional 98.8 million shares in TPS Eastern Africa to take its holding in the company to 64.36 per cent.

The new share acquisition represents the outcome of a proposed debt to equity conversion with the hotelier owing the fund Ksh.1.7 billion ($14.5 million).

“While the COVID-19 pandemic is currently adversely affecting TPSEA’s financial position and performance, AKFED strongly believes the conversion is important to ensure the long-term sustainability and growth of TPSEA and its group going forward,” noted the fund.

“The conversion will further strengthen TPSEA’s balance sheet and consolidated group balance sheet, by improving its debt/equity ratio and current ratio. This will offer further flexibility to TPSEA and its group of companies to grow its business over time, by improving its debt service capacity to the current lenders, and to demonstrate to lenders long-term support by AKFED, a majority shareholder.”

AKFED will nevertheless not acquire minority stakeholders even after becoming the dominant shareholder and has since applied to the Capital Markets Authority (CMA) for exemption from takeover regulations.

Minority shareholders in the hotelier include Pyrus Investments, Craysell Investments, Jubilee Insurance and the Aga Khan University Foundation.

Domiciled in Geneva Switzerland, AKFED is an international development agency dedicated to building enterprises in the developing world.

The fund operates as a network of affiliates with more than 90 projects.