The venture, which is planning to make investments of up to $1,500 million, will initially be supported by equity payments of about $390 million - 50 per cent of which will come from Bank of Scotland (BoS) and the remainder equally from KHI and Fairmont. Fairmont will manage the fund and BoS will provide debt financing for the joint venture. UK-based Cedar Capital Partnerswill serve as manager and investment adviser.

The first port of call for the new investment group is likely to be London. KHI is in advanced negotiations with Quinlan Privatefor a stake in the Savoy Hotel, which the Ireland-based investor group acquired as part of the Savoy Groupportfolio for $750 million in May. Fairmont Hotels, in which KHC chief executive officer Prince Alwaleed bin Talal has a 5 per cent stake, is understood to be targeting February as a start-date for a management contract.

The talks began soon after Prince Alwaleed and the UK's Millennium & Copthornesold their 50 per cent stakes in New York's Plaza Hotel (MEED 27:8:04).

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