Ambani’s Reliance strikes $98m deal for New York’s Mandarin Oriental hotel

Mukesh Ambani’s Reliance Industries pays $98m to accumulate a controlling stake within the Mandarin Oriental resort in New York from a Dubai sovereign wealth fund.

The resort, which opened in 2003 and is positioned close to Central Park, caters to high-end travellers — with some suites going for greater than $14,000 an evening — and has been majority-owned by the Funding Company of Dubai since 2015.

This isn’t the primary time the Indian vitality to telecoms conglomerate has invested in luxurious hospitality. Final spring, Reliance purchased a 300-acre British nation membership for £57m, which features a resort, and it has invested in Oberoi Lodges.

The deal underscores how exhausting the hospitality business has been hit by pandemic-related curbs on enterprise journey. The 244-room resort, which is simply off the Columbus Circle roundabout, was valued at $340m in 2006.

However analysts say these trophy belongings are small change for the sprawling conglomerate managed by Ambani, Asia’s richest man.

“When [RIL’s] steadiness sheet is one thing near $170-180bn, [hotel investments are] not a significant proportion of [its] complete steadiness sheet. It’s neither right here nor there,” mentioned Harshavardhan Dole, an analyst at brokerage IIFL, whose protection consists of Reliance Industries.

“It seems that, given the quantum of funding, one ought to see these as extra of a portfolio funding than strategic,” Dole added.

For Dubai’s sovereign wealth fund, the sale, which was introduced late on Saturday, closes a chapter on a bevy of underperforming hospitality investments.

Istithmar Lodges, which belonged to Dubai government-owned Dubai World, had acquired a 73 per cent stake within the Mandarin Oriental New York in 2006, when the Hong Kong-headquartered Mandarin Oriental Resort Group determined to promote half of its fairness.

It was considered one of a spree of landmark New York resort purchases made by the freewheeling group. These included W Resort Union Sq., which Istithmar purchased for $285m and was compelled to promote for $2m three years later, in 2009, when Dubai’s debt disaster broke out.

The Funding Company of Dubai purchased the Mandarin Oriental New York stake in 2015 within the aftermath of Dubai World’s main restructuring.

To buy the Mandarin Oriental New York, a Reliance subsidiary will purchase the Cayman Islands-incorporated Columbus Centre Company, which Reliance mentioned was the oblique proprietor of a 73.37 per cent stake within the resort. The deal is predicted to shut in March.

Reliance, India’s largest publicly traded firm, has additionally provided to purchase out the remaining homeowners on the identical valuation. The Mandarin Oriental Resort Group retained a 25 per cent stake and continues to handle the resort. The group didn’t instantly reply to a request for remark.

The pandemic devastated the Mandarin Oriental’s revenues — which fell to only $15m in 2020 in contrast with $113m the earlier 12 months, in line with a Reliance inventory change submitting.

Extra reporting by Primrose Riordan in Hong Kong and Simeon Kerr in Dubai


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