US fund Apollo raises €204m to buy Irish hotel group Tifco

Tifco runs 24 hotels, some owned and many operated under management contracts

Clontarf Castle in Dublin, which is operated by the Tifco hotel chain.

Clontarf Castle in Dublin, which is operated by the Tifco hotel chain.

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Documents compiled for Tifco, the State’s second-largest hotel group, suggest US distressed assets fund, Apollo Global, recently bought the company for just over €200 million, far less than previously estimated.

Apollo agreed in September to buy the group, whose portfolio includes a management contract for the Clontarf Castle hotel in Dublin and freehold ownership of three Crowne Plaza properties, from Goldman Sachs, which took control from private Irish investors in 2014. Tifco runs 24 hotels, some of which it owns but many are operated under management contracts.

When news first emerged early in the summer that Goldman had put Tifco on the blocks, rumours circulated in the property industry that the underlying assets could fetch €500 million to €600 million.

Consortium

Recent filings for a number of Tifco-associated companies suggest that Apollo originally financed the purchase last month through one of its funds in Luxembourg. Trident Bidco. The Apollo company was set up to do the deal, and then essentially refinanced the cost with a consortium of financial institutions arranged by Deutsche Bank.

Legal and banking documents filed for the transaction by Tifco this month suggest Apollo has borrowed €204 million “for the purposes of refinancing the acquisition [of Tifco] including the repayment of total funding debt”.

This included cash to pay back a €178 million loan to Apollo’s Luxembourg fund, which had been used to buy the shares of Tifco’s holding company, plus a further €26 million to close out a tranche of higher cost, short-term “mezzanine” debt.

Preliminary inquiry

The Competition and Consumer Protection Commission last month cleared the takeover after a preliminary inquiry.

Tifco was originally set up by a consortium of private Irish investors, including DID Electrical founder Gerry Houlihan and his long-term business partner Aidan Crowe, a former bank manager.

Goldman gained control by buying Tifco’s loans from IBRC, which was placed into liquidation by the State in 2013.

In its last set of accounts, for 2016, it made profits of €4.5 million and valued its assets at €93.6 million. With about 2,400 bedrooms under its control, it is second in size only to Dalata Hotel Group in the Irish market.

Tifco could not be reached for comment.

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