Searchlight Capital Partners has joined a growing number of private equity interests plunging cash into the cruise sector, buying a majority stake in Greek niche operator Celestyal Cruises.
The latest example of private equity interests investing in cruise lines since the onset of Covid-19 is another indication that investors are confident the sector will recover quickly from the pandemic.
Louis plc, the Cypriot company that owns Celestyal, revealed on Monday that Searchlight, which has an asset portfolio estimated to be worth $6bn, will provide an initial tranche of €30m ($33.8) in senior debt financing to the Piraeus-based cruise company upon closing of the deal, together with a revolving €10m credit facility.
The agreement provides for additional funding of up to €30m to support development plans, subject to certain conditions.
Louis will spin off Celestyal into a separate limited partnership company, Celestyal Holdings, in which Searchlight will hold a 60% stake.
Louis, via subsidiary Louis Hotels, will own 40%.
Searchlight will appoint the majority of the board members for Celestyal Holdings, while the existing Celestyal Cruises management team will continue to operate the company out of its office in Piraeus.
London-based Searchlight partner Ralf Ackermann said the investment company is excited to support Celestyal chief executive Chris Theophilides and his management team and to work with the Louis Group on the next chapter of Celestyal’s growth.
"The cruise industry has shown a tremendous amount of resilience coming out of the pandemic, and as Greece’s major, home-porting cruise line, Celestyal has played a pivotal role in the country's strong tourism recovery," Ackermann said.
"We believe this partnership will help to reinforce the company’s position as the leading cruise operator in the eastern Mediterranean region and enhance its uniquely authentic experiences and operating footprint."
Aegean leader
Celestyal is a small company cruise by industry standards, with only two ships, but fills a lucrative niche in the Mediterranean cruise market.
Two ships, the 37,800-gt, 1,575-passenger Celestyal Olympia (built 1982) and 25,600-gt, 1,450-passenger Celestyal Crystal (built 1980) operate short, destination-intensive cruises to the Greek islands of the Aegean.
These seasonal cruises are especially popular with package tour operators that include the three, four and seven-day island-hopping cruises in their land-based tour itineraries.
A third ship, the 56,800-gt Celestyal Experience (built 1993, ex Costa neoRomantica) was added in July 2020, but, without ever carrying a passenger under Celestyal, was sold again this past September in a move the company said would enhance liquidity.
Theophilides said Searchlight's infusion of capital will propel Celestyal's growth strategy and accelerate its fleet renewal plan.
"Prior to the pandemic, Celestyal was on a fast growth trajectory," he said.
"We are extremely pleased to have Searchlight as a strategic partner and are eager to join forces with them to build on our positive momentum ... Our 2022 season is already looking solid, and with this significant development, we are extremely excited about Celestyal's journey ahead."
