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Shopping mall Shangri-La: IFC’s lending for luxury

27 February 2014

Peacock Lounge, Traders' Hotel Yangon

In December 2013, the Bretton Woods Project highlighted how long-shelf-life vanilla-crème-filled croissants and an online TV guide had been added to the IFC’s lengthy track record of investments that have weak or indirect development outcomes (see Bulletin Dec 2013, Update 86, 84). We again bring a list of recent IFC investments that seem of somewhat dubious merit if the focus is truly on the bottom 40 per cent of the population.

Recent IFC hotel investments

Overview Claimed development outcomes Status Partner company
Deluxe hotel and serviced apartments in Yangon, Burma (also known as Myanmar)


$80 million loan for the construction and refurbishment of the existing 485-room Traders Hotel in downtown Yangon; and development of a 240-room Shangri-La branded service apartments complex
  1. Construction of critical business infrastructure
  2. Improvement of hotel service standards
  3. Employment creation and knowledge transfer
  4. Benefits to the local economy and local linkages
  5. Increase in tax revenues and foreign exchange
  6. Private sector development by sending a positive signal about Burma, particularly to other foreign investors
 Board approved on 19 December 2013IFC information Shangri-La Asia, headquartered in Hong Kong and Kuok Limited based in Singapore; both controlled by Robert Kuok, who according to financial news agency Bloomberg is Southeast Asia’s richest man with a net worth of $15.8 billion

Peacock Lounge, Traders' Hotel Yangon

Peacock Lounge, Traders’ Hotel Yangon
5-star hotel and office in Dar es Salaam, Tanzania

 

$11 million loan for a 32-storey twin tower complex which will comprise a 250 room five-star hotel, an office and retail building, and a car park
  1. Filling the large gap between demand and supply for quality commercial space in Dar es Salaam
  2. Job creation
  3. Increased government revenues
  4. Contribution to the enhancement of Dar es Salaam business infrastructure
 Board approved on 21 April 2010, contract signed 5 December 2013IFC information China Railway Jianchang Engineering, ultimately owned by China Railway Group Ltd, the largest integrated construction group in China and Asia and the third largest contractor in the world based on total revenue

The Mwalimu Nyerere Foundation Building Project

The Mwalimu Nyerere Foundation Building Project
Crowne Plaza hotel in Addis Ababa, Ethiopia

 

$19 million loan for a 210-room, 11-storey business hotel
  1. Provision of modern business infrastructure
  2. Migration of best practice in global hotel management
  3. Employment creation
  4. Benefits to local suppliers
  5. Increased tax revenues
 Board approval scheduled for 17 March 2014IFC information Tsemex Global Enterprise, Ethiopian business; the project will be branded “Crowne Plaza” hotel under a full management contract with brand owners International Hotels Group (IHG)
3-star hotel in Ndola, Zambia

 

$4.5 million loan for an 80-room 3-star Protea branded hotel in the Copperbelt town
  1. Business infrastructure development
  2. Employment generation
  3. Linkages to the local economy
 Board approval scheduled for 20 February 2014IFC information Union Gold Zambia; Protea Hotel brand bought by Marriott International in January 2014

 

Recent IFC shopping mall investments

Overview Claimed development outcomes Status Who benefits? Location of company?
Garden City Shopping mall in Nairobi, Kenya

 

$37 million loan and $8.2 million equity investment in the largest shopping mall in East Africa combined with 421 residential units
  1. Urban development: the expansion of the city of Nairobi
  2. Provision of modern retail infrastructure for “reputable international retailers”
  3. Access to property for citizens
  4. Job creation
  5. Benefits to local suppliers
  6. Increased tax revenues
  7. Development of the private sector: the project will stimulate two key sectors of the economy, retail and property, with multiplier effects
 Board approved on 1 July 2013IFC information ARE2, a private equity fund managed by UK-based fund manager Actis, formerly part of UK government-owned Commonwealth Development Corporation*

Garden City Nairobi

Garden City Nairobi
Jabi Lake shopping mall in Abuja, Nigeria

 

$10 million equity investment in a shopping mall of “international standard”
  1. Provision of critical business infrastructure
  2. Provision of a growth platform for local small and medium enterprises (manufacturers and wholesalers) in the retail value chain (owners of stores within mall)
  3. “Improvement of food security” as a result of increased distribution outlets for local farmers leading to increased demand for local products (fresh produce in particular, but also locally processed foods)
  4. Improvement in hygiene, health and safety standards in the food retail sector
  5. Serve as a catalyst for urban development: “development of better aesthetic environments”
  6. Creation of employment
  7. Generation of tax revenues
  8. Transfer of operational and environmental & social best practices
 Board approved on 30 December 2013IFC information AR2, a private equity fund managed by Actis*

Jabi Lake development

Jabi Lake development

* AR2 and ARE2 both refer to the Actis Africa Real Estate Fund 2. The IFC separately took a stake in the $278 million fund with a $25 million investment in June 2011.