Blackstone is nearing a deal to reacquire Trans Maldivian Airways, nearly eight years post its initial exit for $500 million. This move follows TMA’s challenging phase during the pandemic, leading to bankruptcy and restructuring under new lenders. Despite interest from other investors, the valuation expectations have tempered enthusiasm due to the sector’s vulnerabilities.
Blackstone, the leading private equity firm, is close to reacquiring Trans Maldivian Airways (TMA) at nearly the original selling price, approximately eight years after exiting for $500 million. This planned reacquisition comes after TMA faced significant challenges during the pandemic that led to its bankruptcy and subsequent debt restructuring under new lenders, including Carlyle and King Street Capital Management.
In 2017, Blackstone divested its $98 million investment in TMA for a remarkable $500 million, marking a significant return of 4.8 times over four years. The ownership transfer to Bain Capital and Tempus Group was backed by a combined investment of $115 to $120 million; however, the tourism sector’s downturn due to the pandemic severely impacted their operations, ultimately culminating in financial distress.
As TMA adapted to the pandemic’s repercussions by transitioning to an on-demand service, its revenue for 2024 was reported at $177.9 million, with expectations of generating EBITDA between $70 million and $80 million this fiscal year. Various private equity firms and business houses expressed interest in TMA, yet many opted against investing in a sector vulnerable to significant external shocks.
The current valuation anticipated by lenders ranges from $550 million to $700 million, but interest from potential buyers has been lukewarm at this level. TMA operates a fleet of 65 seaplanes, facilitating over 400 flights daily to more than 80 luxury resorts across the Maldives, which remains an integral part of the travel and hospitality industry post-pandemic.
Since its inception in 1993, TMA has evolved from operating helicopters under the name Hummingbird Island Helicopters to becoming the primary seaplane operator in the Maldives. The company’s fortunes are intrinsically tied to tourism, as it serves as the exclusive transfer partner for numerous resorts, ferrying over a million passengers annually across the islands.
The competition in the Maldives tourism sector has intensified as India and China vie for a leading position, with the landscape continuing to evolve into 2024 and beyond.
The imminent reacquisition of Trans Maldivian Airways by Blackstone illustrates the firm’s strategic maneuvering after an initial lucrative exit in 2017. Despite past challenges due to the pandemic, TMA’s significant role in Maldives tourism, operating a vast network of flights to luxury resorts, underscores its resilience. However, the broader competition and potential risks in the tourism sector remain crucial factors that investors must navigate going forward.
Original Source: infra.economictimes.indiatimes.com
