Asia Leisure forms partnership with Teoria Investment Japan for new hotel projects
By Cheranka Mendis
Asia Leisure, a fully-owned subsidiary of Asia Capital Group, has formed a strategic tie-up with Teoria Investments Japan, through which Teoria has made an initial investment of US$ 2 million into Asia Leisure’s property Taprobana in Balapitiya.
Anticipated to be launched in April 2013, Taprobana is the start of a major expansion drive under Asia Leisure. The total project is estimated to cost US$ 6 million. Holding 34% equity in the hotel, Teoria Investments, a boutique asset management company based in Tokyo, has expressed keen interest in coming on board for Asia Leisure’s future plan on a larger scale as well. The local company is looking at giving 49% private equity in future properties.
Noting that expansion had been on the cards for some time, Director and Acting CEO of Asia Capital Stefan Abeyesinhe on Friday told the media that the lack of funds had been holding back the company from pursuing its dreams.
“We are attempting to build on our own and increase the number of rooms in the national portfolio. We have realised that this is the best time for leisure-related investment and did not want to fall back. Teoria, in that sense, was the perfect solution.”
Abeyesinhe also noted that Japanese investment in Sri Lanka was scarce and that the new tie-up would encourage other Japanese companies to look at Sri Lanka in a favourable manner.
Teoria Investment CEO Shigenori Shinahawa said: “We are proud that Teoria Investment is acting as a bridge between Japan and Sri Lanka through the investment in this project. We are very excited about the future.”
He noted that the company had been on the lookout for investing in the frontier market and diversifying into new sectors. “This is the company’s first investment in to Sri Lanka and we view this as a strategic private equity investment.”
“Teoria is already discussing the possibility of partnering in our second property under construction in Wadduwa,” Abeyesinhe said. Asia Leisure is also looking at opening two 90-100 room hotels in Trincomalee and Galle in the near future.
Upon completion Taprobana will add 30 rooms to the portfolio while the Balapitiya property will add another 35.
The company also owns and operates the 12-room Park Street Hotel in Colombo, The River House in Balapitiya and the 15 room Tamarind Hill in Galle.
Abeyesinhe expressing his views on the market situation noted that even though it had taken a bit of a beating, the possibilities of a quick recovery were great. “We have a whole new market opening up in Russia and the East. Growth will expedite soon and we believe it will not slow down more. We believe this is the right time for us to invest in the market.”
With the expansion plans now in order, Asia Leisure is in the pursuit of forming a brand name to be used on all properties. Asia Wealth Management Director Saminda Weerasinghe told the Daily FT that with new properties coming up, the company was looking at creating an umbrella for all projects.
“Conceptually we have already begun the search for a brand name. With this venture, developing a brand name becomes more necessary since this is the beginning of more hotels under the company. Prior to this, we owned only three properties and as such a brand name did not seem a necessity.”
Asked about the status of the new project, Abeyesinhe stated that the company was on the lookout for more private equity. Being of larger scale, he estimated that the new projects in Trincomalee and Galle would need an initial investment ranging between US$ 7-8 million each. “We need to get the finances in order before we start. We do not want to halt construction mid way due to lack of funds.”
The company is however currently looking at properties in Galle, Abeyesinhe said. “We are looking at properties of a smaller proportion in the Southern coast.
The properties we have looked at are quoting massive premiums, which are rather obscene. We have not been successful in negotiating on our terms.”
