Trinity VC close to €50m Choice Hotels deal

Private equity firm Trinity Venture Capital is in advanced talks to buy the Quality and Comfort hotel chains from Choice Hotels Ireland for more than €50 million. The likely deal is backed by clients of Davy stockbrokers and Pat McCann, former chief executive of the Jurys Doyle group, writes Arthur Beesley,Senior Business Correspondent

The beneficiaries of the sale will include property developer Paddy Kelly, Choice managing director Frankie Whelehan, members of the McCormack business family and company managers.

Seven mid-range Quality hotels in Dublin, Cork, Galway, Wexford and Limerick and four budget Comfort hotels in Dublin and Portlaoise are likely to change hands when the transaction is finalised.

Less than a month after Trinity raised €50 million in a flotation on the IEX and AIM small-cap markets in Dublin and London, the forthcoming deal marks its entry into a new business sector.

Led by executive chairman Shane Reihill, Trinity has been primarily but not exclusively an investor in technology companies. The firm is considered likely to use the deal as a platform for further expansion in the hotel industry.

A memorandum circulated to potential investors suggests Davy is raising €31 million for the deal, with the balance provided by Trinity and Mr McCann. There will also be a debt element to the deal, with Ulster Bank owner Royal Bank of Scotland and AIB the likely financiers.

Choice Hotels Ireland was established in 1998 and currently holds the franchise rights for Choice International's range of hotel brands. Following the sale of its mid-range and budget hotels, the company is considered likely to concentrate on the four-star Clarion brand.

It is believed that the management and lease contracts on the Quality and Comfort hotels will change hands in the deal. It is unlikely that there will be a change in the freehold ownership of the hotel buildings, which are separately controlled by Choice shareholders. The hotels were built in a tax incentive scheme.

Trinity Venture Capital declined to confirm or deny its involvement in the deal.

"TVC Holdings plc, a leading private equity investor and investment manager, is in ongoing discussions with a number of parties with a view to growing its existing portfolio of companies over the next number of years," said a spokeswoman.

Mr Whelehan declined yesterday to comment.