Golden Tulip

Transaction Background

In August 2002 Graphite Capital led the £33 million fundraising for Golden Tulip, a developer and manager of superior budget hotels in the UK. We agreed to fund the roll-out of both freeholds and leaseholds. Graphite therefore invested in a parallel entity which owns the hotels.

Deal Attractions

The superior budget hotel market in the UK was undersupplied and we identified an excellent opportunity to develop a portfolio of profitable hotels. We had previously successfully backed the management team who developed and managed the Golden Tulip hotel chain.

Achievements

we agreed a £100 million financing package with a third party to finance hotels developed by Golden Tulip
the group grew to operate six hotels in the UK and developed a strong pipeline for further openings
the management team improved operational and financial controls over the portfolio to maximise its value
the sale and lease back of two hotels enabled the company to reduce its borrowings and repay part of Graphite's loan stock

Exit

in early 2007 we were approached by a number of consolidations of the UK budget hotel market
in September 2007 the group was sold to Whitbread PLC for £44 million. The sale generated proceeds to Graphite of 3.0 times the amount invested and an IRR of 34.5 per cent