Duet Group has signed a partnership agreement with Bouygues Batiment International to establish Duet Africa Hotels, a vertically integrated hotel investment, development and asset management company, with an initial target equity raise of $200m.

Duet Group and Bouygues Bâtiment International will contribute 20% of the equity raised.

Henry Gabay, Co-Founder and CEO of Duet Group, said: “This is a unique venture to tap a clear growth opportunity in the hotel sector in sub-Saharan Africa that is supported by strong trade and consumer trends.”

“One of the biggest challenges to the hotel sector in Africa is the ability to build on time and budget. Working with Bouygues Batiment International is the solution to this,” he said.

Duet Africa Hotels will develop, design, build, own, operate and exit a portfolio of internationally branded midscale and upscale business hotels in sub-Saharan Africa.

The venture will target fast growing and resource rich countries such as Nigeria, Ghana, Ivory Coast, Ethiopia, Tanzania, Mozambique, Kenya and Uganda.

The focus will be on greenfield developments or significant refurbishments in standalone or mixed use format with office, residential and retail.

According to Marc Fily, Hotel Development Director at Bouygues Bâtiment International, a subsidiary of France’s Bouygues Construction Group, most of the hotel operators they are working with consider that sub-Saharan Africa is a priority development destination.

"We have working relationships with almost all international hotel operators. All hotel operators we are currently discussing with in relation to several development opportunities in sub-Saharan Africa, are enthusiastic about the venture which is ticking all the boxes,” he said.

Duet has invested over $2bn in emerging and frontier markets including approximately $600m in sub-Saharan Africa public markets and private equity investments over the past six years.

“This is an area we know well. Investments in hotels and real estate are a natural extension of our investment philosophy for the region,” said Gabay.

The investment structure of Duet Africa Hotels will be one of majority equity ownership, with potential co- investment with land owners, local developers and hotel operators with 100% development control.

Duet Africa Hotels will manage the entire development, design, build, legal and finance and asset management functions of each project and the venture.

The former Chief Development Officer Middle East and Africa for hotels group Marriott International, Jean-Marc Grosfort will be the Non-Executive Chairman of Duet Africa Hotels.

Duet and Bouygues Batiment International believe there is a significant opportunity today to enter the hotel sector in sub-Saharan Africa given the region’s sustained economic growth, the current favorable hotel demand-supply imbalance and the high barriers to entry.

Currently there are only an estimated 84,000 branded hotel rooms in Africa with the majority in North Africa and South Africa.

Moreover, hotels in the pipeline are typically subject to long gestation periods due to funding issues and poor execution capabilities with 62% of the hotel rooms reported to open in 2015 not yet ready.

Kamaldeep Manaktala, Managing Director at Duet Private Equity, said: “We see a gap in the market for an institutional grade fully funded hotel platform that has the expertise to deliver and the ability to control the entire development, design build, legal & finance and asset management functions of each project.”

“Duet Africa Hotels combines the significant experience of both Duet and Bouygues Batiment International in Africa, hotels and real estate to fill this gap and mitigate the key development and management risks of the hotel sector in sub-Saharan Africa,” he said.