Grand Hyatt Seoul to Be Sold to Blue Cove Management... 1 Trillion Won 'Big Deal' Sale Price

Memorandum of Understanding Signed with Seoul Mirama (SMC)
KH Group Expected to Gain 400 Billion KRW Profit

[Asia Economy Reporter Kwangho Lee] The 5-star hotel 'Grand Hyatt Seoul' is being sold to Blue Cove Asset Management. It is a 'big deal' worth around 1 trillion won.

According to the investment banking (IB) industry on the 3rd, Blue Cove Asset Management recently signed a memorandum of understanding (MOU) with Seoul Mirama (SMC), which holds shares of Grand Hyatt Seoul, for the acquisition. Due diligence is expected to begin soon. The sale price is known to be around 1 trillion won.

Seoul Mirama (SMC) owns 100% of the shares of Grand Hyatt Seoul. The largest shareholder of SMC is Inmark No.1 Private Equity Fund (PEF). Major investors mainly consist of KH Electronics, KH Philux, KH Construction, IHQ, and Jangwon Tech, which are part of the KH Group.

Grand Hyatt Seoul is one of the most historic hotels in Korea, having opened in 1978 on Namsan. It is a representative 5-star hotel used by former U.S. presidents such as Barack Obama and Donald Trump when visiting Korea.

The KH Group participated as a strategic investor (SI) when the Grand Hyatt Seoul was acquired by the private equity fund (PEF) 'Inmark Private Equity Fund' at the end of 2019. Since then, major affiliates of the KH Group secured shares in Inmark Private Equity Fund and became the largest shareholders. Once the sale of Grand Hyatt Seoul is finalized and about 1 trillion won is inflowed, the financial structure of KH Group, the major shareholder of SMC, is expected to improve significantly.

KH Group invested 600 billion won to acquire Grand Hyatt Seoul in 2019. It is expected to generate about 400 billion won in profit from this sale. KH Philux, which plays a central role in KH Group, posted an operating loss of about 7.1 billion won last year. KH Construction also recorded an operating profit of 500 million won last year, down about 80% from 2.6 billion won in the same period the previous year.

Blue Cove Asset Management, the new owner of Grand Hyatt Seoul, is an asset management company that has been focusing on hotel investments, recently opening Grand Josun Busan and Parnas Hotel Jeju in the Jeju Jungmun Complex.

Meanwhile, Grand Hyatt Seoul has been in the red for the past two years due to the impact of the COVID-19 pandemic. It posted operating losses of 32.5 billion won in 2020 and 22 billion won last year.