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Hony buys $246m stake in Chinese hotel operator

  • Andrew Woodman
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Hony Capital has agreed to acquire a RMB15 billion ($246 million) stake in Chinese hotel company Shanghai Jin Jiang International Hotels Development.

According to a statement, the GP bought 100 million shares in Shanghai Jin Jiang at RMB15.08 apiece for a 12.43% stake in the business. The price represented a 23% discount to the company's Thursday close of RMB19.55. Hony will become the biggest institutional investor in the company.

Shanghai Jin Jiang said that the proceeds from the transaction will be used to provide the additional capital needed to scale up the business and develop outlets of select service hotels over the next three years. Another RMB1 billion has been earmarked for repayment of short-term bank borrowings.

The deal comes amid growing interest in Chinese property developers among private equity investors. Yesterday it was reveled  The Carlyle Group was in talks with real estate developer China Vanke to acquire stakes in nine of its shopping malls. Carlyle has also made hotel investments, acquiring 49% of Mandarin Hotel Holdings in 2012.

China's Ministry of Commerce has already approved Hony's investment in Jin Jiang, but the securities regulator has yet to green light the deal.

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