The government has commenced the process of divesting its ownership stake in five hotels, namely Kenya Safari Lodges, Mt Elgon Lodge Limited, Golf Hotel Limited, Sunset Hotel, and Kabarnet Hotel. The Privatisation Authority issued a call for consultants to facilitate the sale of these hotels, which are controlled by the Kenya Development Corporation (KDC).
This move follows the recent approval by the Cabinet to sell six state-owned enterprises as part of efforts to expand the country’s hospitality industry through private investment. The consultants sought will be tasked with conducting a comprehensive review of financials, industry analysis, commercial aspects, operations, regulatory considerations, and legal aspects related to the KDC-controlled hotels.
Regarding the Kenya Safari Lodges & Hotels, other shareholders will have preemptive rights to purchase the remaining shares from KDC. If these rights are not exercised, the remaining shares will be sold through an open tender process. Preemptive rights serve to protect existing shareholders from dilution in value or control when new shares are issued.
The sale of shares in Mt Elgon Lodge Limited, Golf Hotel Limited, and Sunset Hotel will be conducted through an open tender process, while Kabarnet Hotels Limited will be divested through the sale of its assets. The KDC’s annual report for the fiscal year ended June 2023 revealed that the institution holds 5.2 million units of shares across these five hotels, valued at approximately Sh671.9 million.
To determine the sale price, the Privatisation Authority will rely on a business valuation or share equity valuation report prepared by the consultants. These reports will include an appropriate financial model and a proposed share price, facilitating the execution of the transaction in line with established valuation principles and market dynamics.
