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BHG launches private equity fund

Brazil Hospitality Group is launching a private equity fund (FIP), which will be the company’s priority vehicle for investments in greenfield projects.

The operation complies with CVM Instruction 391/03 and is targeted at qualified investors, with the minimum subscription amount being BRL1m.

Named BHG Modal Fundo de Investimento em Participacoes em Hotelaria, the FIP will add speed and investment volume to the nationwide expansion strategy outlined by BHG for the hospitality sector.

"We are starting with BRL150m, but the operation aims to raise up to BRL400m for investments in the development of greenfield hotels, one of the key growth drivers for BHG in the coming years," says Pieter J. F. van Voorst Vader (pictured), chief executive of BHG S.A – Brazil Hospitality Group.

Construction of greenfield hotels started in 2010 when BHG announced an intensive programme for the development of economic projects, called “selected services”, which envisages the construction, over the next five years, of over 4,500 rooms in 40 cities with strong demand and growth potential for business tourism. So far, the company has announced 10 greenfield projects, which will add 1,772 rooms to the hotel chain by 2014.

The fund, registered with the Securities and Exchange Commission of Brazil (CVM), was distributed by Banco Modal, will be administered by Intrag DTVM, managed by Modal Administradora de Recursos LTDA, and will have an investment period of five years, with a total period of 10 years.

Besides holding a stake of up to 40.67 per cent initially in the fund (which should decrease to up 25 per cent with the entry of new members in the fund), BHG will serve as the specialist consultant for the fund for which it will be duly remunerated. The company will prospect, structure and indicate potential hotel projects, besides holding exclusive rights to manage the projects.

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