- PickAlbatros operates a portfolio of 4-star and 5-star hotels located in key tourist destinations in Egypt.
- Vantage Capital’s exit highlights the resilience and growth of Egypt’s hospitality sector amid challenging global conditions.
- Egypt’s hospitality sector is a key pillar of the country’s economy, attracting 15 million international tourists annually.
Vantage Capital, Africa’s mezzanine debt fund manager, has announced the successful full exit of its investment in PickAlbatros Hotels, a leading hotel owner and operator based in Egypt.
PickAlbatros operates a portfolio of 4-star and 5-star hotels located in key tourist destinations along Egypt’s Red Sea coast, including Sharm El Sheikh, Hurghada, Sahl Hasheesh, and Marsa Allam.
These resorts are popular for their luxurious beachfront access, fitness clubs, water parks, and swimming pools, making them major attractions for international tourists, particularly from Europe.
The investment exit marks a milestone for both Vantage Capital and the PickAlbatros group, highlighting the resilience and growth of Egypt’s hospitality sector amid challenging global conditions.
The pandemic challenge and Vantage Capital’s entry
In December 2020, amid the COVID-19 pandemic economic fallout, Vantage Capital invested $18.4 million into PickAlbatros Hotels. This investment came when Egypt’s hospitality industry was under severe strain, with global tourism at an all-time low due to widespread travel restrictions.
The pandemic has sharply reduced tourist numbers, causing immense financial pressure on the country’s hotels and resorts, including PickAlbatros.
Vantage Capital’s entry provided crucial funding that enabled the hotel group to cover essential working capital requirements and carry out renovation work on newly acquired hotels. This support allowed PickAlbatros to maintain smooth operations despite the global downturn in tourism.
A model of mezzanine debt’s value proposition
South Africa-based Vantage Capital’s investment in PickAlbatros illustrates how mezzanine debt can provide flexible and strategic financial support during challenging times. David Kornik, Partner at Vantage Capital, underscored the fund manager’s approach to the investment, noting that they anticipated a recovery in the hospitality industry once the pandemic was under control.
“Our investment in PickAlbatros Hotels is a model story for the value proposition of mezzanine debt,” Kornik stated. “We took a pragmatic commercial view that the hospitality sector would recover post-COVID and were willing to support a strong underlying business at a time when banks were too risk-averse.”
This approach paid off, as PickAlbatros Hotels not only survived the pandemic but thrived as the tourism industry rebounded. The group was able to repay Vantage Capital in an orderly manner, highlighting the success of the partnership between the fund manager and the hotel group.
Supporting Egypt’s tourism growth
Egypt’s hospitality sector is a key pillar of the country’s economy, attracting 15 million international tourists annually and serving as a crucial source of hard currency. PickAlbatros Hotels has played a big role in supporting tourism growth in Egypt, particularly in the Red Sea region.
The group’s founder, Mr. Kamel Abu Ali, has been instrumental in putting resort towns such as Hurghada on the map as popular destinations for European tourists.
Omar Gharbawi, Associate Partner at Vantage Capital, highlighted the positive impact of the investment on Egypt’s tourism sector. “PickAlbatros has played an important role in contributing to tourism growth in the region, and we are proud to have partnered with one of the biggest hotel players in the Red Sea,” Gharbawi noted.
The expansion of PickAlbatros’s room capacity from 10,000 to 14,000 keys over the past three years is a testament to the group’s growth and success, even during global economic uncertainty. This expansion increased the group’s ability to serve more tourists and contributed to the broader recovery of Egypt’s tourism industry.
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A successful exit for Vantage Capital
Vantage Capital’s full exit from PickAlbatros Hotels represents a successful conclusion to its involvement in the hotel group. The investment began during a crisis and was a win-win for both parties.
Vantage Capital’s mezzanine debt allowed PickAlbatros to weather the pandemic storm. At the same time, the hotel group’s strong performance during the post-pandemic recovery enabled a smooth and profitable exit for the fund manager.
The partnership between Vantage Capital and PickAlbatros Hotels underscores the importance of flexible and innovative financing solutions in times of economic uncertainty, especially in Africa.
Vantage Capital was key in sustaining and growing one of Egypt’s leading hospitality groups by providing strategic support when traditional financing options were unavailable.
