Dubai International Capital (DIC) has signed an agreement to buy UK budget hotel operator Travelodge from private equity firm Permira, in a deal worth about £650m (US$1.2bn).
Permira-advised funds backed the buyout of Travelodge from Compass Group in February 2003. In 2004, the company underwent a sale and lease back of its property portfolio, returning approximately 40% of the cost of the investment to investors.
According to SVG Capital, one of Permira’s investors, the value of the transaction for SVG Capital is about £81.3m. “After a provision for carried interest, this represents an uplift of £37.1m (25.3p per share) to the December 2005 valuation of Travelodge,” it says.
DIC’s investments in the UK tourism industry include the £800m (US$1.5bn) secondary buyout of Tussauds Group in 2005, and the £280m acquisition of the London Eye in 2005/06.