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Standard Investment Bank (SIB) won a Sh12.63 million deal to guide the sale of the government’s stake in five top hotels.
Disclosures show that SIB, which was awarded the three-month contract on September 17, 2024, would guide the Privatisation Authority in the sale of a Sh671 million government stake in five hotels controlled by the Kenya Development Corporation (KDC) — Kenya Safari Lodges, Mt Elgon Lodge Limited, Golf Hotel Limited, Sunset Hotel, and Kabarnet Hotel.
A proposal by the Privatisation Authority earlier this year indicated that other shareholders of the Kenya Safari Lodges & Hotels Limited will have pre-emptive rights to acquire the remaining shares of the hotel chain from the KDC, failure to which the sale of the shares shall be done through an open tender.
A pre-emptive right is a provision to existing shareholders in a corporation to purchase newly issued stock before it is offered to others. The right protects current shareholders from dilution of value or control.
The Kenya Safari Lodges and Hotels Limited incorporates the Mombasa Beach Hotel, Ngulia Safari Lodge and Voi Safari Lodge.
The sale of shares in Mt Elgon Lodge Limited, Gold Hotel Limited and Sunset Hotel is expected to be conducted through an open tender, while the disposal of Kabarnet Hotels Limited will be via the an asset sale.
According to the KDC’s annual report for the financial year ended June 2023, the development finance institution disclosed 5.2 million shares representing direct or effective shareholding in the five hotels.
The value of the shares was rounded off to Sh671.9 million, with the bulk of the value tied up in the Golf Hotel Limited at Sh608.9 million.
The Privatisation Authority will rely on a business valuation or share equity valuation report from the sought-after consultant to determine the execution price in the sale of the five hotels.
The sale of government stakes in various agencies, however, remains uncertain after the High Court declared the Privatisation Act 2023 unconstitutional because it was enacted without meaningful public participation.
High Court Judge Chacha Mwita ruled that the Act also violated the oversight role of Parliament. The State is expected to appeal the decision.
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