IFC mulls $45m financing for Thailand’s Descap1 Private Equity Trust

Hilton Garden Inn Phuket Bangtao one of the first hotels Descap1 Private Equity Trust is acquiring.

The International Finance Corporation (IFC) is proposing a debt facility of up to $45 million for Descap1 Private Equity Trust, a distressed hospitality asset investment vehicle of the Thailand-based Destination Group.

The Trust, managed by Destination Capital, a subsidiary of Destination Group, plans to renovate, rebrand, and reposition up to eight 4-star hotels in order to capture returns when the market rebounds from the COVID-19 pandemic in 3-4 years, IFC said in an investment proposal.

The total capitalisation of the Trust is expected to be 8 billion baht ($256.4 million). It includes a senior secured loan facility equivalent to 35 per cent of the Trust, or 2.75 billion baht, in two equal tranches. IFC’s proposed investment is aimed to make the first tranche.

Another 2.75 billion baht mezzanine equity is expected to be raised from other lenders, and the remaining 30 per cent of the Trust, or 2.5 billion baht, will be taken up in two tranches by institutional, and governmental agencies, as well as sophisticated private investors.

Destination Capital has significantly increased the target capitalisation of the Trust from the 2.5 billion baht it announced on September 30. At the time, the firm said that Descap1 has a five- to seven-year holding period and will target investor returns of up to 15 per cent per year.

The first three hotels the Trust is acquiring are The TJ Hotel in Chonburi Province, Hilton Garden Inn Phuket Bangtao in Phuket, and Mandarin Eastville Pattaya in Chonburi Province, Thailand.

IFC said its proposed financing will be one of the first green funds earmarked for acquisition and refurbishment.

“This green fund will also set a precedent for other fund managers, as well as being a benchmark for similar investments in the property and hospitality sectors elsewhere,” it said.

The World Bank Group member added that Descap 1 will become the first EDGE-refurbished fund globally. “The EDGE (Excellence in Design for Greater Efficiencies) green building standard is not widespread in Thailand today. Having a private equity trust committed to EDGE is expected to create green building awareness among local entrepreneurs.”

Destination Group, founded in 1997 by Gary Murray, who is the firm’s current CEO, is engaged in ownership and operation of prime hotels and operation of branded restaurants through Destination Eats. The group owns and operates 1,420 hotel rooms across Thailand through Destination Resorts, a hotel owner and operator focusing on acquiring distressed hotel assets and repositioning them to prime assets.

Murray; James Kaplan, CEO of Destination Capital; and Ross McClellan, a senior advisor of Destination Capital, each own 33.3 per cent of the asset manager.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.