ID :
95252
Wed, 12/16/2009 - 16:56
Auther :
Shortlink :
https://oananews.org//node/95252
The shortlink copeid
Adia buys key stake in Hyatt
Abu Dhabi, Dec 16, 2009 (WAM) - The Abu Dhabi Investment Authority (Adia) has purchased a 2.9 per cent stake in Hyatt Hotels Corp in a move economists see as a bet on the recovery of the leisure industry and even the global economy in the near term.
According to filings made public by the US Securities and Exchange Commission (SEC), Adia purchased 4.8 million Hyatt common shares on November 4, or the day the hotel chain went public with 38 million shares at $25 (Dh92) per share. At that price, Adia's investment totals $118.9 million.
The company's stock closed at $29.5 on Monday, an 18 per cent increase since November 4.
A spokesman for Adia confirmed the fund is not looking to gain a controlling stake in Hyatt consistent with its long-standing investment strategy, but declined to comment further. About 60 per cent of Adia's unclassified wealth is invested in index funds.
"This is a bet on global economic recovery in 2010 and 2011," said Tudor Allin-Khan, Chief Economist for HC Securities, the Cairo-based investment bank managing $1 billion in assets. "The key issue for a sovereign wealth fund is to look for long-term value opportunities. Buying into the hotel and leisure industry at this stage in the economic cycle represents value."
Travel and luxury
Allin-Khan added he believes the global economy has reached the bottom judging by the rise in commodity prices, for example. The recovery phases would see people regaining employment and spending more money on travel and luxury goods, justifying Adia's investment.
For the first nine months of this year, Hyatt reported a $31-million loss, according to its initial public offering (IPO) prospectus. Hyatt, the third-largest US hotel chain by revenue, ended last year with a $168-million profit on $3.8 billion in revenue. Despite operating in 45 countries, the company relies on the US market for about 80 per cent of revenues.
Adia's stake represents 10.9 per cent of listed shares after underwriters exercised an option to purchase 5.7 million more shares after the IPO. Still, Hyatt remains under the firm grip of the American Pritzker family, which controls more than 60 per cent of shares and nearly 80 per cent of voting power on the company's board.
SEC filings also show 3 million Hyatt common shares were sold to the Government of Singapore Investment Corp, the country's largest sovereign wealth fund, on the same day of the IPO. "Operators will face in 2010 attractive distressed opportunities and would be able... to start capitalising again in real estate..." Arnaud Andrieu, investment and advisory vice-president at CB Richard Ellis Middle East, wrote in a research note.
According to filings made public by the US Securities and Exchange Commission (SEC), Adia purchased 4.8 million Hyatt common shares on November 4, or the day the hotel chain went public with 38 million shares at $25 (Dh92) per share. At that price, Adia's investment totals $118.9 million.
The company's stock closed at $29.5 on Monday, an 18 per cent increase since November 4.
A spokesman for Adia confirmed the fund is not looking to gain a controlling stake in Hyatt consistent with its long-standing investment strategy, but declined to comment further. About 60 per cent of Adia's unclassified wealth is invested in index funds.
"This is a bet on global economic recovery in 2010 and 2011," said Tudor Allin-Khan, Chief Economist for HC Securities, the Cairo-based investment bank managing $1 billion in assets. "The key issue for a sovereign wealth fund is to look for long-term value opportunities. Buying into the hotel and leisure industry at this stage in the economic cycle represents value."
Travel and luxury
Allin-Khan added he believes the global economy has reached the bottom judging by the rise in commodity prices, for example. The recovery phases would see people regaining employment and spending more money on travel and luxury goods, justifying Adia's investment.
For the first nine months of this year, Hyatt reported a $31-million loss, according to its initial public offering (IPO) prospectus. Hyatt, the third-largest US hotel chain by revenue, ended last year with a $168-million profit on $3.8 billion in revenue. Despite operating in 45 countries, the company relies on the US market for about 80 per cent of revenues.
Adia's stake represents 10.9 per cent of listed shares after underwriters exercised an option to purchase 5.7 million more shares after the IPO. Still, Hyatt remains under the firm grip of the American Pritzker family, which controls more than 60 per cent of shares and nearly 80 per cent of voting power on the company's board.
SEC filings also show 3 million Hyatt common shares were sold to the Government of Singapore Investment Corp, the country's largest sovereign wealth fund, on the same day of the IPO. "Operators will face in 2010 attractive distressed opportunities and would be able... to start capitalising again in real estate..." Arnaud Andrieu, investment and advisory vice-president at CB Richard Ellis Middle East, wrote in a research note.
