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Three Hills announces a new cash injection of up to €29.5 million into Castellet Hospitality to boost its growth strategy as the company signs three acquisitions in the South-East of France

12 December 2023 Investment Activity

Three Hills (the “Firm”) is delighted to announce it has agreed to provide up to €29.5 million of follow-on capital in Castellet Hospitality (“Castellet” or “the Company”), a rapidly growing hotel group headquartered in Marseille and operating in the South-East of France. This latest financing round by Three Hills Capital Solutions IV (“THCS IV”) will increase the Firm’s commitment to Castellet to over €80.0 million and will be used to support the Company’s ambitious buy-and-build strategy: a core pillar of the original investment thesis, with four acquisitions completed to date.  

The new investment comes as Castellet progresses the acquisition of three hotels in the South-East of France. These include: Novotel Lyon Confluence, located in the centre of Lyon next to its business district; Hôtel de Mougins, a charming Provençal estate set within the outskirts of Cannes and close to a number of international golf courses; and B&B Saint Jean de Maurienne, in the heart of the French Alps at very short distance from several ski resorts. These new acquisitions will bolster the current portfolio by expanding the group’s geographic footprint, further diversifying its mix of business and leisure travellers, as well as budget and mid-range locations. Castellet has identified clear value creation opportunities at each respective site, which it will enact with Three Hills’ support. The three transactions will bring an additional 261 rooms to the hotel group, increasing the current portfolio by 16%, and taking total locations to 25. As a result, group revenue will also increase by +34%.

Castellet continues to build its acquisition pipeline as there is extra headroom in Three Hills’ funding to support the business with a fourth transaction in early 2024. Beyond M&A, together with the Company led by hospitality expert Gilles Larrivé, Three Hills has implemented a number of value creation initiatives at group-level, including promoting energy efficiency policies across the portfolio and launching two new head office departments focused on construction and development. These initiatives, in addition to recurrent funding, has helped Castellet scale tremendously in the last 18-months, allowing the business to succeed in one of the most competitive segments of the hotel industry.

Mauro Moretti, Founder & Managing Partner at Three Hills, stated: “This latest investment reinforces our commitment to Castellet, a rapidly growing and resilient group that is distinguishing itself as one of the most dynamic players in its segment. When it comes to the entrepreneurs and management teams that we back, it is important for them to know that Three Hills remains a supportive funding partner throughout the lifecycle of an investment, providing multiple follow-on investment rounds if required to unlock a company’s full growth potential. Importantly, we are also pleased to be deploying more capital into the French market, where we are looking to grow our presence with our current portfolio companies and new investments.”

Gilles Larrivé, Founder and CEO of Castellet Hospitality, added: “I am delighted to announce that we are continuing to strengthen our partnership with Three Hills. Our collaboration with the Firm has been instrumental in increasing our portfolio, as well as in enriching our strategic focus through the combined expertise of our existing management team and Three Hills’ value creation levers. We will continue to grow our acquisition pipeline with a view to become the blueprint for pre-eminent hospitality operations in France.”

Victor Benazech, Managing Director at Three Hills, concluded: “Our latest €29.5 million round in Castellet reaffirms our dedication as a long-term investor in the Company and our interest in the hospitality sector. As this new injection of capital underscores our partnership, it will support Castellet’s ambitious acquisition strategy, fortifying their presence in the South-East of France. We proudly stand by Castellet as they acquire three new exceptional properties, further building their presence in the flourishing French hospitality market.”