Common Market for Eastern and Southern Africa (Comesa) Competition Commission has commenced the inquiry into the proposed merger between Ukarimu Ltd and Fairview Hotel Ltd amid signs of increased mergers and acquisitions in the hospitality industry.

The complex undertaking will see the South African owners of Nairobi’s Fairview Hotel, Town Lodge and City Lodge Two Rivers sell the three hotels to the Actis private equity fund for Sh1 billion.

Plans are already in top gear following an indirect acquisition by Actis and Jamison, through Ukarimu, of the entire issued share capital of Fairview Hotel. Ukarimu Ltd and Faraja Ltd are the real estate funds under Actis.

Ukarimu will acquire shares from the City Lodge Hotels Ltd after Ukarimu was incorporated by Msafiri Ltd, a special purpose vehicle incorporated under the laws of Mauritius, by Actis Hospitality Mauritius Ltd. Prior to the transaction, Jamison will acquire shares in Msafiri.

Coronavirus knocks saw the South African owners of the hotels throw in the towel after the hospitality industry suffered from travel bans which led to cancellation of bookings and hotel closures. The hotels estimate they shed in excess of Sh2 billion as at the end of 2020 on pandemic shocks.

Target undertaking

“After receiving a notification in terms of Article 24 of the Regulations regarding the proposed merger involving Actis Hospitality Mauritius Limited (“Actis”) and Jamison Valley Holdings Limited (“Jamison”), through Ukarimu Limited (“Ukarimu”) as the acquiring undertakings and Fairview Hotel Limited as the target undertaking, intends to embark on an inquiry in terms of Article 26 of the Regulations,” said Comesa in a statement.

In the common market, the Actis group operates in the broader real estate development market and is active in Egypt, Kenya, Mauritius, Rwanda, Tunisia and Uganda. 

However, Jamison is a private limited company incorporated under the laws of the British Virgin Islands. Jamison does not operate in the common market and does not control any entities within the bloc.

Comesa will determine whether or not the proposed transaction is likely to substantially prevent or lessen competition within the market and whether the proposed transaction is contrary to public interest.