Carlyle takes controlling stake in China hotel operator

The purchase was made via Carlyle Asia Partners III, a $2.55 billion buyout fund that closed in 2010. Eric Zhang, a managing director at the private equity firm, will become co-chairman of Mandarin Hotel Holdings.

"Mandarin Hotel Holdings Limited is uniquely positioned in the mid-market hotel segment with its competitive edge in product design and marketing strategies," Zhang said in a statement. "We are confident in the growth potential of Crystal Orange Hotel and Orange Hotel as well as the mid-market hotel segment in China."

Founded in 2006, the company operates designer hotels in Beijing, Tianjin, Dalian, Hangzhou and Ningbo. Crystal Orange Hotel targets business and leisure travelers in the mid- to high-end segment, while Organ Hotel offers affordable solutions to budget-sensitive customers.

Carlyle's China portfolio companies include New Century Tourism Group, a Hanghzou-based hotel operator with around 70 properties in Beijing, Shanghai, Hangzhou, Chengdu and Kunming. The company was reportedly planning an IPO last autumn but nothing materialized.

Private equity firms have a strong track record when it comes to backing hotel companies in China. VC players including IDG Ventures and Sycamore Ventures were early investors in Home Inns while IDG also participated in funding for China Lodging Group, alongside Chengwei Ventures and Northern Light Venture Capital. Both firms are now NASDAQ listed. Last year Morgan Stanley exited its majority stake in Shanghai Motel Management as part of a $469.5 million buyout by Home Inns.

Carlyle has invested approximately US$4 billion in China across more than 60 deals. The private equity firm is reportedly in the process of raising its fourth Asia buyout fund, targeting $3.5 billion.

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• Topics
• Consumer
• Greater China
• Buyouts
• The Carlyle Group
• China
• buyout
• Consumer