Shuaa Partners, the private equity arm of Dubai investment bank Shuaa Capital, has completed the sale of its entire stake in Rotana Hotel Management Corporation to Rotana chairman, Nasser Al-Nowais.

Shuaa Partners’ Fund I made the investment in Rotana in 2006 through a private placement to fund the hotel company’s rapid expansion.

During the fund’s holding period, Shuaa Partners played an active role in Rotana’s development and participated on its board of directors.

This transaction does not impact the relationship of Shuaa’s two other funds with Rotana. The hotel company has been retained as the exclusive manager and operator of 4 and 5 star hotels, resorts, serviced apartments and budget business hotel properties to be developed in Saudi Arabia and the broader Middle East and North Africa (Mena) region by the respective Shuaa Saudi Hospitality Fund I and Shuaa Hospitality Fund I. Rotana is an anchor investor in the latter fund.

Although the terms of the sale are confidential, the exit combined with the dividends received over the four-year holding period, generated a gross internal rate of return (IRR) of 36 per cent and a multiple of 1.95x on its realised investments. (The realisation multiple is found by dividing the cumulative distributions from a project by the paid-in capital.)

“It is particularly pleasing to note that the fund, which completed this exit in the midst of a very challenging economic and financial environment, is believed to be one of few regional private equity funds to return money to limited partners this year,” says Sameer al-Ansari, chief executive of Shuaa Capital.