NAIROBI, Kenya, December 20, 2023—A financing package announced today from IFC and Proparco to Kasada Hospitality Fund LP will inject new life into a 206-room hotel in Nairobi, Kenya, with green and sustainable building practices and renovations, supporting the city's important hospitality sector. In addition, MIGA, a member of the World Bank Group, will provide political risk insurance to the project.
Kasada will use the financing package to refurbish, modernize, and expand the former Crowne Plaza in Nairobi's Upper Hill, a business district that hosts embassies, international organizations, and the headquarters of some of East Africa's largest corporations. Following this revamp, the property will re-open as a dual branded Pullman & Mercure property and also include a state-of-the-art co-working space under the brand WOJO, which will cater to a growing demand in the market for more flexible workspaces.
The financing package includes an $11 million loan from IFC and an $11 million parallel loan from Proparco. In addition, MIGA will provide $27.5 million in political risk insurance to the project.
The travel and tourism sector accounts for an estimated 9 percent of Kenya's GDP, with Nairobi contributing a significant portion due to its status as a commercial center within Eastern Africa and a hub for many regional and global organizations. Demand from corporations is a key driving factor behind the hotel market.
The hotel aims to become EDGE certified, an innovation from IFC that helps clients reduce their environmental footprint by using more environmentally friendly building materials and less water and energy.
"We look forward to bringing our multi-disciplinary expertise in creating value and impact at the Pullman & Mercure Upper Hill. With the support and commitment from this long-term financing solution from IFC and Proparco, we will reposition, expand, and enhance the building and its facilities to bring them to today's modern hotel industry and highest ESG standards. This asset is about to enter a new life cycle and contribute to the revitalization of the Kenyan hospitality sector post the COVID-19 pandemic," said Olivier Granet, Kasada's Managing Partner and CEO and David Damiba, Kasada's Managing Partner and CIO.
"IFC invests in the hotel and tourism industry because it is a major contributor to employment, foreign exchange earnings, and tax revenues. IFC's partnership with Kasada is supporting the development of a strong and resilient hospitality sector across key markets in Africa including Kenya," said Henrik Elschner Pedersen, IFC Regional Industry Director in Africa for Manufacturing, Agribusiness, and Services.
"Tourism is vital for developing economies, helping support employment, strengthening supply chains, and bringing in foreign exchange. MIGA's partnership with Kasada contributes to the current recovery of the tourism and hospitality sector from the impact of COVID-19 across sub-Saharan Africa," said Muhamet Bamba Fall, MIGA's Director of Operations.
The financing is part of a broader partnership announced in July 2021 between the Kasada Hospitality Fund and IFC, where IFC committed to invest up to $160 million in Kasada's fund to help it build a strong and resilient hotel portfolio across sub-Saharan Africa as the industry recovers from the effects of the COVID-19 pandemic on tourism and business travel.
The MIGA guarantees are part of a master contract issued by MIGA in 2021 to cover the Kasada Hospitality Fund's equity investments in the redevelopment and construction of hotels in Sub-Saharan Africa. The guarantees provide coverage against the risks of transfer restriction, expropriation, and war and civil disturbance for up to 15 years. To date, MIGA has issued guarantees for 12 hotel projects in six countries under the master contract, for a total of about $180 million.
About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
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About MIGA
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping to mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war and civil disturbance; and offering credit enhancement to private investors and lenders. Since its creation, MIGA has issued over $70 billion in guarantees across 123 developing countries in support of more than 1,000 projects. For more information, please visit: https://www.miga.org | Stay updated via Twitter: https://twitter.com/MIGA | Follow us on LinkedIn: https://www.linkedin.com/company/wb-miga
About Kasada Capital Management
Kasada Capital Management is an independent real estate private equity platform dedicated to the hospitality industry in Africa. The firm was established in 2018 with the support of Qatar Investment Authority, the sovereign wealth fund of Qatar and Accor, a global hospitality leader. Kasada's investment strategy spans all segments, from budget to luxury, and targets both greenfield and brownfield projects. Kasada's hotels are operated under the Accor umbrella, benefiting from the broad range of Accor brands and their international reputation. By investing in a region that offers strong growth opportunities, Kasada aims for both an attractive risk-adjusted return for investors and a long-term positive impact on local economies. In April 2019, Kasada closed its first fund, Kasada Hospitality Fund L.P., with equity commitments of more than US$ 500 million. For more information, visit www.kasada.com and follow us on LinkedIn.
About Proparco:
Proparco, a subsidiary of the Agence Française de Développement group, has been working alongside private-sector players for over 45 years to help build a fairer, more sustainable world. With an international network of 23 local offices, Proparco works closely with its partners to build sustainable solutions to environmental and social challenges in Africa, the Middle East, Asia and Latin America. Proparco has sector-specific expertise, a diversified range of financial tools adapted to the different stages of a company's development, notably through its subsidiary Digital Africa, and a technical support offer, Propulse, to leverage the impact and performance of its partners. With its new 2023-2027 strategy "Acting together for greater impact", Proparco is exploring, strengthening and amplifying its modes of intervention with its partners. To find out more: https://www.proparco.fr/fr/strategie.
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