Abu Dhabi fund to buy stake in Hong Kong hotels

US $2.4bn deal to see new joint venture between ADIA and Hong Kong-based New World

Hong Kong panorama
Hong Kong panorama

Sovereign wealth fund Abu Dhabi Investment Authority (ADIA) has agreed to buy a 50% stake in three Hong Kong hotels from a group led by New World Development Co Ltd, as reported by Reuters.

The HK $18.5bn (US $2.4bn) deal will see New World sell 50% of its interest in Grand Hyatt Hong Kong, Renaissance Harbour View and Hyatt Regency Hong Kong, to a joint venture to be formed with ADIA.

The Hong Kong-based company has opted for the 50-50 joint venture instead of a long planned IPO of its hotel properties.

New World will get HK $10.1bn ($ 1.30bn) for the sale and plans to use the proceeds to fund its Hong Kong property development projects including the marquee New World Centre Development in Tsim Sha Tsui.

The ADIA deal marks the second real estate-related investment by a Middle Eastern fund in Hong Kong in the past six months as sovereign wealth funds hunt for stable returns. In October, Qatar Holding paid $616 million for about one fifth of Lifestyle International Holdings.

New World shares were up 2% in Hong Kong trading on Thursday, while the benchmark Hang Seng index was down 1%.

Adrian Cheng, the grandson of founder Cheng of New World, personally led the negotiations with ADIA, a person with direct knowledge of the matter told Reuters, declining to be identified. The person was not authorised to speak publicly about the matter.

Chow Tai Folk Enterprise Ltd, a private company owned by Hong Kong's Cheng family, is a minority holder of those hotel assets. It will receive about $500 million from the deal.

The three hotels had a market value of HK$21.3 billion ($2.75bn) as of March 1.

J.P. Morgan is acting as the sole financial advisor to New World.

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