Saudi Arabia’s PIF Invests in Rocco Forte’s Hotel Group

The luxury hotel group owned by Sir Rocco Forte has received a significant boost with a 49% stake acquisition by Saudi Arabia’s $700 billion Public Investment Fund. The ambitious plan ahead involves doubling the chain’s current size in the coming five years through expansion efforts in the Middle East, Italy, and the United States.

Announced on Monday, the deal places a value of £1.2 billion on Sir Rocco Forte’s collection of 14 hotels spread across Europe. Sources familiar with the details suggest that when factoring in debt, the enterprise value stands at £1.4 billion. This agreement involves the exit of Italian sovereign wealth fund CDP Equity, previously holding a 23% stake, alongside the departure of four out of Forte’s five sisters from the business.

Sir Rocco Forte and his sister Olga Polizzi will maintain their controlling interest of 51%. Additionally, the Public Investment Fund (PIF) is set to inject tens of millions of pounds into the group. This substantial investment aims to facilitate a doubling of the hotel portfolio’s size within the upcoming five years.

In an interview with the Financial Times in Brown’s Hotel in London’s Mayfair, Forte, who chairs the group, said he was “very bullish” about demand from US travellers, which account for more than a third of turnover, and that he expected “a lot more business” from visitors based in the Middle East thanks to the partnership with Saudi Arabia.

While prior pledges for expansion have been made by Forte, he acknowledges that the support from Saudi Arabia marks a significant difference this time around. With the backing of Saudi Arabia, Forte anticipates a substantial boost in the business’s financial capacity, enabling more robust efforts towards expansion.

“We’re in a good position in the right industry at the right time,” said Forte, arguing that the luxury hotel sector was “quite protected [from an economic slowdown] compared to the rest of the economy”.