The Social Security and National Insurance Trust (SSNIT) has announced the suspension of its negotiations for the sale of a 60 percent stake in several prominent hotels. This decision aligns with a directive from the National Pensions Regulatory Authority (NPRA), signaling a cautious approach toward managing substantial state-owned assets.
Kofi Bosompem Osafo-Maafo, the Director General of SSNIT, disclosed this significant halt during a media briefing focused on the operations of the State Pension Trust. The move comes amidst growing scrutiny over the transactions intended to divest interests in key hospitality assets, including the notable Labadi Beach Hotel. Despite the pause, Osafo-Maafo emphasized the need for further dialogue with stakeholders. He outlined plans to engage more comprehensively with all partners and actors involved to foster a deeper understanding of the strategic reductions in hotel holdings. This approach aims to optimize the returns from SSNIT’s investments in the hospitality sector.
Addressing specific concerns about the Labadi Beach Hotel, the Director General clarified that the property has not been sold and acknowledged that negotiations had previously stalled due to disagreements over the payment model among other issues. He reiterated that these negotiations were conducted in good faith, with the overarching goal of maximizing the value derived from SSNIT’s assets. Complex issues surrounding the sale’s larger context have led SSNIT to think about holding more stakeholder discussions. Osafo-Maafo pointed out that more thorough involvement would have avoided some of these difficulties, emphasizing the delicate balance required in asset management.
A realistic assessment of asset performance served as the basis for the decision to sell interests in underperforming hotels. Osafo-Maafo noted that it would be wise to cut down on SSNIt holdings and distribute risk among strategic investors because a number of the hotels had been continuously missing dividend payments or experiencing losses. The Director General said that La Palm Hotel had been losing money for 11 of its 15 years of existence, which was a shocking disclosure. Because of its severe losses, experts have even suggested that the hotel be demolished. The financial rationale behind SSNIt’s choice to reorganize its holdings in non-performing assets is highlighted by this context.
As stated by Osafo-Maafo, the sale process itself has been thorough and transparent. In order to begin selling its hotel interests, SSNIT formed a steering group in 2018 with the participation of three board members, many SSNIT management personnel, and the board chairs of the various hotels. The selection of SEM capital to conduct the valuation was properly executed, countering allegations of preferential treatment in appointing transaction advisors. Osafo-Maafo detailed the International Competitive Tendering (ICT) processes followed, aligning with the Public Procurement Act requirements. This process culminated in the selection of a transaction advisor after a public advertisement attracted fifteen firms, demonstrating a competitive and open selection process.
Further, advertisements for an Expression of Interest (EOI) for a Strategic Partner for SSNIT Hotels were placed in major publications, leading to nine companies submitting proposals. An evaluation committee subsequently shortlisted six firms to submit detailed technical and financial proposals. The Director General addressed worries about possible undue influence and political exposure associated with the proposed buyer, Rock City, controlled by Minister of Food and Agriculture, Bryan Acheampong, in the midst of these procedural justifications. He cleared up misconceptions about the bidding process and denied charges of pressure to favor Rock City. He specifically disputed a claim made by former New Patriotic Party Chairman Freddie Blay concerning a potential high bid.
This delicate situation illustrates the difficulties of managing public assets in a way that strikes a balance between stakeholder engagement, openness, and financial prudence. The goal of SSNIT in this complex situation is still to maximize benefits for trust beneficiaries while abiding by legal requirements and moral principles.
