CG Group sets up funds worth $800m to buy distressed assets in India, Europe and South Asia

CG Group sets up funds worth $800m to buy distressed assets in India, Europe and South Asia

Dec. 22, 2017, 12:22 p.m.

CG Hotels & Resorts, part of the Kathmandu-based Chaudhary Group, is setting up three funds, totaling $800 million (more than Rs5,000 crore), to buy distressed assets in India, south Asia and Europe. With this, the company aims to double its hospitality portfolio by 2020, said Binod Chaudhary, chairman, Chaudhary Group. 

The India-focused fund will have a corpus of around $200 million, the size of the south Asia-focused fund will be around $300 million and the third fund will be of €250 million that would look at acquiring distressed hotels in Europe, especially Spain and Italy, according to executive director Rahul Chaudhary. Europe is a new territory for the Nepalese conglomerate. The company is also planning to set up a fourth fund to expand in the Middle East and African region. “CG Group will be the general partner (GP) with an equity contribution of 20%. The funds will typically have a life cycle of 5-7 years,” said the executive director.

According to a new published in Indian Media Livemint, the rest will be raised from institutional investors, private equity firms and high net-worth individuals. For the fund that would focus on Europe, CG Group has already entered into a partnership with Singapore-based SafeGuard Real Estate Management Pte. Ltd., he added. CG Hotels and Resorts, which currently operates 94 hotels with 5,000 rooms in 60 cities across different countries, targets to have 200 hotels with 10,000 rooms by 2020, Chaudhary said.

In India, it operates 49 hotels. Besides its own brands, CG Hotels & Resorts operate about 10 properties in partnerships with the Taj Group in India, Nepal, Sri Lanka and the UAE. CG Hotels & Resorts runs hotels under brands such as Fern, Zinc, Beacon and has partnerships with other hospitality groups like Radisson and Alila, among others. The company is also in talks with Marriott Group and Hyatt for joint ventures in European countries, Chaudhary said. “We want to focus on luxury and experience-led hospitality business. We are looking at developing more properties under Taj Safari as well. In India, we want to develop high-end luxury resorts and properties as wellness destinations. Hospitality will be the growth driver for us in future, and should account for around 20% of the group’s revenue in five years,” said Binod Chaudhary, who is known as the sole billionaire in Nepal. CG Group, which sells Wai Wai instant noodles, also has business interests in real estate, banking, education, consumer electronics, and telecommunication, among others.

The group runs 122 companies across 30 countries. Hotel and hospitality sector has seen revived interest from investors, including private equity firms, in the past couple of years. Real estate consulting firm JLL in its report on Hotel Investment Outlook 2017 noted hotel real estate transactions worldwide is expected to touch around $60 billion.

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