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Genting Hong Kong to sell stake in cruise ship brand to Canadian pension, TPG for US$489 million

By Asia Asset Management  
Aug 8, 2019

Cruise ship operator Genting Hong Kong (GHK) is selling a 35% stake in its Dream Cruises brand to Canada’s Ontario Teachers’ Pension Plan (Ontario Teachers’) and US private equity firm TPG for US$489 million.

Hong Kong-listed GHK has signed an agreement with the pension fund and two TPG units – TPG Capital Asia and TPG Growth – to sell the stake in two tranches, one expected next month and the second in December, Ontario Teachers’ says in a statement on August 6.

The first tranche for a minimum 24.5% stake is for $342 million. The balance of the payment is for a second tranche of up to 10.5%.

The pension fund says GHK will also receive an additional incentive payment based on the profitability of Dream Cruises. It did not disclose the amount of this payment.

According to GHK’s latest financial results, the company’s three cruise ship brands, including Dream Cruises, earned $1.35 billion of revenue last year, up from $1.02 billion in 2017.

The statement did not specify the individual stakes that Ontario Teachers’ and TPG will hold in Dream Cruises. Spokespersons for the pension fund, TPG, and GHK did not immediately respond to questions from Asia Asset Management.

The investment “is a testament of Ontario Teachers’ positive view on longer term growth in Asia and is part of our continued drive to expand our global footprint by strengthening our local presence in Asia”, Ben Chan, the pension fund’s regional managing director for Asia Pacific, says in the statement.

According to GHK, the sale will bolster its financial position to take delivery of two ships for Dream Cruises between 2021 and 2022.

“The investment by TPG and Ontario Teachers’ will help Dream Cruises to have the youngest and technologically most advanced fleet of quality German built cruise ships,” K.T Lim, chairman and chief executive officer of GHK, says in the statement.

GHK is a member of Malaysia’s Genting Group.

Ontario Teachers’ had around C$191.1 billion ($143.7 billion) of total assets at the end of 2018.

Texas-based TPG currently manages more than $108 billion of assets globally.