JKH Services

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John Keells Holdings PLC (“JKH” or “the company”) is Sri Lanka’s largest listed conglomerate. JKH operates primarily in six core sectors, broadly comprising of the following:(a)   Leisure/Hotels: owns and manages city hotels in Colombo and resorts in Sri Lanka and Maldives under the ‘Cinnamon’ brand; and is the leading tour operator in Sri Lanka. Combined room inventory of the Group is  about 2,560 rooms under management across ten city/resort hotels in Sri Lanka and four in the Maldives; The industry group also hold a Land bank of 125 acres of freehold and 111 acres of leasehold land in key tourism locations.(b)   Retail: Owns and operates the second largest supermarket chain (Keells) with 109 outlets across the country. and Nexus mobile, one of the most successful loyalty program in the country with approximately 1.3 million active members. The supermarket operations are supported by two distribution centers (DCs) and a fresh produce processing center, all located within Colombo. The operations at the DCs and processing centers are managed by John Keels Logistics Limited (JKLL). The industry group also includes John Keells Office Automation (JKOA), the authorised distributor for Samsung smartphones and leading global office automation brands. (c)   Consumer foods : Has a strong market presence in beverages, frozen confectionery and processed meats through Elephant House and Keells-Krest brands. Per estimates, holds ~40 per cent and ~45 per cent market share in the domestic beverage and ice cream markets respectively.(d)   Property Development: Reputed property developer in the country with multiple high-rise apartments completed and fully sold; Projects under construction include the iconic integrated mixed-use development 'Cinnamon Life' comprising an 800-room super luxury hotel and conference centre, a state-of-the-art office complex, luxury residential apartments and a retail mall. Holds one of the largest privately held, developable land banks of over 36 acres in central Colombo.(e)   Transportation – operates bunkering services and is engaged in warehousing and supply chain management, is one of the largest cargo and logistics service providers in the country as well as owns a 42% stake in one of two private container terminals in Colombo Port;(f)    Financial Services: JKH has a minority stake in Nations Trust Bank (NTB), a local commercial bank, as well as is the majority shareholder of Union Assurance, one of the largest private life insurance companies in the Country . The portfolio also includes a stock brokering firm.  JKH has a long relationship with IFC commencing from 1999 when JKH and IFC were promoter shareholders and IFC was a lender to South Asia Gateway Terminals, the first private container terminal in Colombo. Also, the same year, JKH and IFC were promoter shareholders in NTB. In 2008, IFC invested through a senior corporate loan to JKH for tourism projects, which was repaid in 2016. Since then, IFC has made two other investments in NTB in 2017 and 2019. IFC also has advisory engagements with Cinnamon Hotels,  with the aim of supporting tourism development and enhancing competitiveness of the potential for tourism in the Eastern Province. Currently, JKH is already a founding member of SheWorks, an IFC founded network of corporates to lead initiatives to boost women’s private sector participation. The proposed facility of US$175 million USD Senior Secured Loan to JKH (the Project”) is to fund the following investments in an optimum manner: (i) the expansion of its supermarket chain, (ii) the completion/expansion/refurbishment/ expansion of hotel properties in Sri Lanka and the Maldives, and (iii) general corporate uses associated with JKH’s retail and leisure businesses. At the time of the appraisal, the refurbishment was ongoing at the following resorts and thus they were covered in the scope:Hakurra Hurra, Maldives (80 rooms to 100 rooms): construction of 20 rooms on the neighboring islands (now total 100 rooms), new over-water villas, changes in the beach facing rooms, addition of new guest facilities (i.e. pool bar, swimming pool and restaurant). Also, seagrass removal and maintenance dredging of channel and mooring area was undertaken. During the appraisal, the furnishing-finishing operations for the rooms/other facilities and equipment installation was ongoing.Cinnamon Bentota Beach, Sri Lanka (… to 151 rooms): Construction of the three new buildings for guest rooms and a new restaurant, and refurbishment of the main building (leading to reduction in number of rooms). During the appraisal, the finishing operations were ongoing. Cinnamon Dhonveli, Maldives (148 rooms to 152 rooms): This hotel was only partially closed for refurbishment. Overall, 4-5 new rooms, new arrival jetty and pavilion, new restaurant and bars have been added. During the appraisal, the finishing operations were ongoing.  The refurbishment of Bentota Beach and Maldives resorts and is completed and refurbished hotels are operational since Dec 2019. The other hotels covered in the appraisal were Trinco Blu and Cinnamon Citadel in Sri Lanka.