Cinven sees roll-up potential with Hotelbeds Group

  • Deal values hotel room wholesaler at $1.3 bln
  • Cinven teams up with CPPIB for first time on acquisition
  • Company carved out from Tui Group

Cinven sees strong roll-up potential in the fragmented business of providing wholesale hotel rooms to tour operators with its pending acquisition of Hotelbeds Group, which values the company at $1.3 billion, an executive at the firm said.

Cinven already spotted “five or six” potential add-on deals for Hotelbeds Group, a carve-out from Spain-based Tui Group with operations in Orlando, Florida, said Chris Good, senior principal at Cinven.

He declined to provide any details about the purchase-price multiple for Hotelbeds or which fund the firm tapped for the deal.

With Hotelbeds Group, U.K.-based Cinven teamed up with Canada Pension Plan Investment Board for the first time on a deal, although the LP and the GP have been in talks to do a deal in at least one other instance, he said.

It’s also the first time Cinven has worked with any LP as an equal partner on an acquisition.

“There are huge consolidation opportunities,” Good said. “Working with CPPIB means we have a huge amount of firepower to do that.”

Prior to winning the deal in an auction, Cinven spent time studying the business of connecting hotels to tour operators worldwide and spotted several possible roll-up opportunities, he said.

While it’s too early to lay out an exit strategy for Hotelbeds Group, Good wouldn’t rule out an initial public offering or a sale to a strategic player.

Good also said the firm may continue to work with LPs on deals rather than old-style club deals with other GPs.

“It’s a great example of the modern state of private equity,” Good said. “Compared to GP club deals, you’re more aligned when you’re working with an LP.”

The deal, which was announced April 28, is expected to close by the end of September.

Cinven is raising its Sixth Cinven Fund LP, which was projected to close at 5.5 billion euros ($6.3 billion) on April 28, according to Oregon Investment Council. Oregon committed $282 million to the pool. Good declined to comment on fundraising.

Action Item: Information about Hotelbeds Group,

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