Nikko acquires £120m UK hotel chain

BancBoston Capital and Indigo Capital have sold Menzies Hotels Group to the European principal finance arm of Nikko Cordial.

Nikko Principal Investments, the European arm of Japanese banking group Nikko Cordial Corporation, has acquired UK hotel chain Menzies Hotels Group in a £120 million (€170 million; $229 million) secondary buyout.
 
BancBoston Capital, the former private equity arm of FleetBoston Financial, and UK-based mezzanine investor Indigo Capital have sold their combined stake in Menzies. Nikko will hold 79 percent of the equity in the hotel group going forward.
 
The remaining shareholding will be held 16 percent by the Menzies family and 5 percent by other operational managers. Chairman Nick Menzies and the incumbent management team will remain with the business.
 
The transaction was led by Mark Clarke and Simon Oakland, London-based principals of Nikko.
 
Menzies Hotels, founded in 1992 by Nick Menzies, operates a portfolio of 14 four-star hotels throughout the UK. According to its 2004 annual report, the group’s total revenues grew by 17 percent to £38.1 million and operating profits were up 22 percent to £10.7 million.
 
Nikko Principal Investments was founded in 1997 and employs 30 professionals from its London base. Transactions include the acquisitions of a number of motorway service groups including RoadChef, Take A Break and Blue Boar and the purchase of UK ports and engineering group Powell Duffryn for £507 million.
 
In November last year, the firm sold its 88 percent stake in UK non-conforming mortgage lender Mortgages plc to Merrill Lynch for an undisclosed sum.
 
Indigo Capital’s investment was made from its third, €250 million European mezzanine fund. Following an initial investment in August 2000 and a follow-on investment in May 2001, the firm held “approximately one-quarter of the business” according to a source close to the transaction.