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Tourism Promotion Services Ltd (Pakistan)
Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
TOURISM PROMOTION SERVICES (PAKISTAN) LIMITED
City and Business Hotel
Date SPI disclosed
February 21, 2007
Projected board date
March 23, 2007
Invested: May 21, 2007
Signed: March 30, 2007
Approved: March 28, 2007
View Environmental & Social Review Summary (ESRS),
Tourism Promotion Services (Pakistan) Limited (TPSP) or the company is a subsidiary of The Aga Khan Fund for Economic Development (AKFED). TPSP owns and operates a network of six hotels throughout Pakistan under the “Serena” brand name. With a cost of $75 million, TPSP is developing:
- a 213-room hotel building as an extension to the existing Islamabad Serena Hotel; and
- an office building of approximately 215,000 square feet of rentable space.
Islamabad Serena Hotel is considered the best in the city due to its superior quality, service standards and location. The project will address rising undersupply of hotel accommodation and office space driven largely by the increase in corporate and economic activity in the country.
Project sponsor and major shareholders of project company
The main sponsor is AKFED, an international development agency dedicated to promoting entrepreneurship and building economically viable enterprises in the developing world. AKFED is part of the larger Aga Khan Development Network (AKDN), a group of development agencies working in health, education, culture, rural and economic development. AKFED directly and indirectly controls 98.66% of the company’s shareholding and the Government of Pakistan owns the remaining 1.34% via the Presidency of Pakistan (0.67%) and the Pakistan Tourism Development Corporation (0.67%).
Serena Tourism Promotion Services S.A. (TPS), a Switzerland based subsidiary of AKFED, provides management support and brand name to TPSP. TPS also operates Serena hotels in Kenya, Tanzania, Uganda, Zanzibar, Mozambique, Rwanda, Afghanistan, Tajikistan and Pakistan and seeks to develop tourism potential particularly in under-served regions. It builds, rehabilitates and manages hotels and lodges that contribute to economic growth in an environmentally and culturally sensitive manner. TPS, through TPSP, has been active in Pakistan for many years, has a strong local presence, is familiar with the local environment and well respected in the country.
IFC has a long-standing relationship with AKFED from investments in a number of projects in infrastructure, banking, micro-finance and hotel sectors.
Total project cost and amount and nature of IFC's investment
Total project cost is estimated at $75 million. IFC will provide a $16 million equity investment.
IFC investment as approved by Board
16 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
To take advantage of the favorable market situation, TPSP acquired valuable land of approx 8 acres, adjacent to the existing Islamabad Serena Hotel, which is located at the foot of the Northern Hills, in the centre of Islamabad, the capital of Pakistan. The hotel is surrounded by high profile government offices, international development agencies, including the World Bank office and the Diplomatic Enclave, which enjoy high level of security.
Anticipated development impact of the project
The project will address the lack of quality accommodation and office facilities in Islamabad to meet the growing needs of domestic and foreign business people visiting the city. Currently, in Islamabad, there are only two international five star hotels and very limited quality office buildings. In addition to improving the city’s business infrastructure, the project will also provide numerous employment opportunities both during construction and operational phase. Extensive hotel training will be provided by TPSP prior to and during operations. The hotel will generate foreign exchange for the country and provide revenue to the government by way of taxes, lease payments and other miscellaneous charges. Linkages with the rest of the economy will strengthen initially involving building materials and later increased volumes of operating supplies and services.
IFC's expected development contribution
IFC will support a company with multiple hotel assets, embarking in a major mixed-use development located in the city center of a Country’s capital with a clear existing supply/demand imbalance.
TPSP and AKFED consider that IFC’s experience and stamp-of-approval would enhance company’s valuation and facilitate the success of a prospective listing process both in the local and international capital markets. Also, IFC will help the company to enhance its corporate governance practices in preparation for the IPO, which will provide a sustainable investment alternative for financial investors and an alternative source of financing of the company’s prospective growth plans. Finally, IFC's involvement will also ensure compliance with World Bank environmental and social guidelines as well as international standards for the sector to be followed by other hotels as best practice.
Environmental and social issues - Category B
This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
TPSP is an environmentally and socially responsible hotel operator with a history of more than 20 years in Pakistan. The Company maintains integrated systems for the management of environmental performance, human resources, occupational health and safety, and life and fire safety in all of its properties. These systems are compatible with the requirements of IFC’s applicable Performance Standards and the Company’s operations are compliant with all applicable IFC industry guidelines.
The greenfield expansion site of the company’s Islamabad Serena Hotel was acquired through auction from the Islamabad Capital Development Authority (CDA), which has managed the development of the city according to a master plan developed at the time of shifting the capital in the early 1960s. No physical or economic displacement of people has resulted from the expansion project nor there is any impact on biodiversity or cultural heritage.
The expansion project has been designed in accordance with international standards for structural engineering, electro-mechanical outfitting and life and fire safety that meets IFC’s requirements. The development of the greenfield site is being undertaken by experienced, reputable contractors under direct supervision of TPSP management in accordance with national environmental and Islamabad CDA’s requirements. Satisfactory controls are in place to manage construction traffic, noise, dust as well as fair and safe working conditions.
For inquiries about the project, contact:
CEO – Tourism Promotion Services (Pakistan) Limited
Ramna 5, Khayaban-e-Suhrawardy,
Telephone: +92 51 287-1000
Fax: +92 51 287-1008
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
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