Management buyout at Hemas’ travel and aviation business

Hemtours (Private) Limited, a sub-subsidiary of Hemas Holdings PLC (HHL), has divested 80.1 percent stake in its Forbes Leisure Services (Private) Limited to Acorn Partners (Pvt)) Ltd., owned by HHL’s former Executive Director Malinga Arsakularatne and several others in the senior management for Rs.201 million, according to a stock filing. 

Forbes Leisure is in the business of operating outbound and inbound travel and airline representation. 

“In line with Hemas’ portfolio strategy of focusing on growing its core sectors of consumer, healthcare and mobility, the group has embarked on restructuring its stakes in the travel and aviation sectors.

“As a result, the group has reduced its shareholding in inbound and outbound travel and selected aviation representation businesses with the majority stake having been acquired by some members of its senior management team,” HHL said in a press release.

However, the transaction excludes Emirates airline agency, which Hemas insisted would be positioned as a core component of the group’s mobility sector along with other businesses in integrated logistics and liner shipping agencies of Evergreen and Far Shipping.

HHL will also remain a minority shareholder of Forbes Leisure Services, retaining 19.9 percent stake.

“We are confident that this change in ownership structure, where the management team becomes significant owners, will drive strong growth in the business,” HHL Group CEO Steven Enderby said. However, HHL withheld releasing specifics of outbound and inbound travel and airline representation operations that were divested to Acorn through Forbes Leisure Limited.
When contacted, Arsakularatne also hesitated to divulge specifics of the acquisition and future plans of the firm.

HHL believes the divestment would enable the group to focus on its core business operations, which include FMCG, healthcare and mobility. “With all these major expansion activities in our core sectors unlocking capital and management from our travel and aviation interests will drive future growth.  

“We anticipate that the restructuring will be earnings accretive and enhance our return on capital. These changes will also provide improved access to capital and increased business focus for these travel and aviation businesses from the new ownership structure,” Enderby said. 

Following the divestment, Arsakularatne stepped down from HHL board and other group subsidiaries including Dolphin Hotels PLC, Serendib Hotels PLC, and Hotel Sigirya PLC with immediate effect.

He was appointed as the Managing Director of Hemas Leisure, Travel and Aviation Group, in April 2016. Prior to this appointment, Arsakularatne served as the Chief Financial Officer of the company for over 9 years. 

In addition, he has over 18 years of experience in investment management, corporate finance and business strategy and is also a CFA Sri Lanka Past President.

Along with Arsakularatne, HHL’s leisure, travel and aviation (LTA) group Finance Director Darshana Udayanga Perera also resigned from the boards of Dolphin Hotels PLC and Hotel Sigirya PLC with immediate effect.