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Poisson or Poison?
By Nathan Andrews, Author & Hospitality Consultant
ust this past week SAMHI announced strategic investment as part of a portfolio? Then
the acquisition of Inmar Tourism for a good investment will align with the long-term
J205 crores. The asset that underlies this strategy and the portfolio mix. Is the investment
purchase is a 142-room hotel with an annual long-term? Then greenfield assets may make
turnover of 24.76 crore. The news report also more sense, if medium-term then operating
mentioned that a further 200-220 rooms may or brownfield assets would be perhaps more
be constructed on the site, which I can safely attractive.
assume was a key consideration in the final For me one of the key factors after
valuation. knowing the why, and assessing the what is the
Bottom line transactions are happening, replacement value. While the current market
and for transactions to happen there needs to supports values of 12 - 14 times EBITDA and
be both a buyer and seller. In my current role, I may be favourable to the seller, those levels do
receive on an average eight to ten opportunities not leave anything on the table for the buyer
a week, a mix of greenfield, brownfield particularly if the investment horizon of the
and operating assets, so is it a good time to buyer is less than eight to ten years. However,
invest? And if so where and what? Perhaps if the EBITDA multiples are close to the
to paraphrase Simon Sinek, the real question replacement value and the underlying land value
should be ‘ why’? if applicable is reasonable, then I believe that
Obviously, there is no straightforward makes for a good investment.
answer as there are a number of factors beyond the even the price. A In short, there is no one-size-fits-all, as a hoarding in the Oberoi
wise king once said about the market ‘“It’s no good, it’s no good!” says Delhi used to say one man’s poisson is another man’s poison! The wise
the buyer- then goes off and boasts about the purchase.’, that remains as man knows the difference.a. n
true today.
So, why invest and what makes for a good investment? I would say The views expressed within this column are the opinion of the
any investment that aligns with the buyer’s goals. Is the acquisition a author, and may not necessarily be endorsed by the publication.
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