Alchemy Partners has sold its 1998 investment in Paramount Hotels to Dawnay Shore Hotels for £215m, which equates to a profit for Alchemy of £67m, or 2.4x money invested.
Alchemy first invested in Paramount Hotels in June 1998 when it put £27m into buying five Paramount hotels alongside which a further three hotels were bought from a national tour operator. Alchemy’s investment of £27m was against a total transaction value of £77m.
Then in August 1999 Alchemy put a further £14m into the Paramount Hotel group when it made a public offer for a listed hotel group, valued at £37m. The listed hotel group was Scottish Highland Hotels plc, a Glasgow-based business. This saw a further six hotels added to the Paramount chain. The following year in July Alchemy funded the group another £6m, against a total transaction value of £12m, to buy a hotel in Oxford.
The buyer of Paramount Hotels, Dawnay Shore Hotels, is a joint venture between Dawnay Day, a UK commercial property investor group, and Shore Capital, a UK investment banking group listed on the London Stock Exchange. Dawnay Shore Hotels financed the acquisition of Paramount Hotels through private equity raised by Dawnay Day and senior debt provided by Anglo Irish Bank. Some of the private equity raised by Dawnay Day came from a £22m listing on the London Stock Exchange’s Alternative Investment Market, which enabled Dawnay Day to give access to this private equity style investment to high net worth individuals seeking private equity exposure with public equity-style liquidity. This listed vehicle is called The Hotel Corporation plc.