Italian fund buys 23% of Rocco Forte Hotels
Sir Rocco Forte is giving up nearly a quarter of his luxury hotels business to Italian investors in return for a £60m investment to double the size of its portfolio in five years. Rocco Forte Hotels will seek to add at least four properties in Italy as a result of the cash injection from sovereign wealth fund Fondo Strategico Italiano. The fund will get 23 per cent of the company, and projects in Venice, Milan, Naples and Sicily have been identified for expansion. Beyond Italy, the group of 10 hotels will add Jeddah next summer and is also looking at Shanghai, New York, Paris and Madrid. Sir Rocco launched the hotel group with his sister Olga Polizzi in 1996. It consists of the Hotel Savoy in Florence, Brown’s in London and the Balmoral in Edinburgh. But Italy is Sir Rocco’s renewed focus, a market he said was ill-served with luxury hotels. "I understand Italy. It’s a difficult place, but as a tourism industry it has a lot of potential," he said. "Room rates are high and occupancy is good. And of course I have my Italian origins." FSI is made up of the Bank of Italy, which has a fifth of the fund, and Cassa Deposite e Prestiti. Sir Rocco said FSI had a remit to help develop Italy’s tourism industry. The cash injection will in part go towards paying down debt. Rocco Forte Hotels has £105m of net debt and the group’s Sicilian resort has £85m of net debt. The group was hit by the credit crunch and suffered a 40 per cent drop in turnover. Sir Rocco sold Le Richemont in Geneva and the Lowry in Manchester to help pay off debt. "Now we are in a position to start moving forward," Sir Rocco said. "I have a much bigger capital base and can raise new debt as and when I need to. Most of our developments will be through management contracts and leases." The deal gives the company an equity value of £260m.