CitizenM Explores Potential Sale as Hotel Chain Seeks Capital

27.03.2024 - 20:51 / skift.com / Sean Oneill / Morgan Stanley

CitizenM, a premium economy hotel chain, has engaged bankers to review a possible sale of either a minority stake or the entire company, according to a report in the Financial Times Wednesday. The owners are being advised by Morgan Stanley and Eastdil Secured.

“We can confirm that CitizenM is looking for new growth capital,” a spokesperson told Skift. “Nothing further to add.”

The Dutch hotel company’s owners include Dutch pension firm APG, Singapore’s sovereign wealth fund GIC, APG Asset Management, and KRC Capital, a private equity firm founded by CitzenM founder Rattan Chadha.

In early 2019, GIC took a 25% equity interest in CitizenM off what it said was an enterprise value of about $2.3 billion (€2 billion).

In 2021, the company raised $1 billion from existing investors to expand post-pandemic. More than half of the hefty sum went toward expanding the brand, which has doubled in size to 40 properties and 10,000 rooms over five years.

Selling a stake or the whole company could enable some shareholders to recover some of the money they’ve invested and possibly collect gains.

CitizenM is a fully integrated hotel real estate developer and hotel operator. That business model puts it at odds with the major hotel groups, which have been shedding assets in an asset-light strategy favored by Wall Street.

A more likely buyer might be another investment entity. Saudi Arabia’s Public Investment Fund has acquired a significant minority stake in Rocco Forte Hotels, the operator of 14 luxury properties, in December. The deal valued the portfolio at $1.8 billion, including debt. In 2022, Cain joined Saudi Arabia’s Public Investment Fund in a $900 million investment in Aman Group.

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