RRJ takes full ownership of Gategroup from HNA

The private equity firm will acquire all outstanding shares in Gategroup from HNA to become the sole shareholder, according to a statement. Temasek Holdings will remain an investor through a mandatory exchangeable bond. Last July, RRJ and Temasek subscribed to a five-year bond which, upon conversion, would give them an up to 49% interest in Gategroup.

HNA bought the company for approximately $1.5 billion in 2016, as part of an acquisition spree that featured airlines, airports and related services, real estate, and financial services. The Chinese group has been looking for ways to monetize assets ever since it was investigated by regulators in 2017 over its high-profile offshore transactions. Fosun Group, Wanda Group, and Anbang Insurance Group also came in for scrutiny, with the government seizing control of Anbang last year.

HNA is said to have sold businesses worth more than $40 billion over the past two years as part of efforts to lighten its debt load. The group wanted to retain its core airline holdings, but with asset sales now directed by China Development Bank, the largest creditor, that strategy has been reversed. Last week it was announced that Cathay Pacific would buy budget carrier HK Express.

Gategroup represents HNA’s second announced divestment to a private equity firm in a matter of weeks. The Blackstone Group agreed to take a controlling interest in Hong Kong International Construction Investment Management Group for HK$7.02 billion ($894 million) in March. HNA bought the company, then known as Tysan Holdings, from Blackstone in 2016.

Gategroup provides catering, retail-on-board and hospitality services to more than 700 million passengers a year, operating out of 200 bases in 60 countries and territories. It has approximately 43,000 employees. Revenue came to CHF4.94 billion ($4.95 billion) in 2018, up from CHF4.55 billion the previous year. Over the same period, net profit fell from CHF85.2 million to CHF49.8 million, although EBITDA rose from 14.5% to CHF343.9 million.

RRJ has $11 billion in assets under management and primarily invests in China and Southeast Asia. The firm closed its third fund in late 2015 at $4.5 billion.

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• Topics
• Greater China
• Support services
• Buyouts
• Europe
• China
• RRJ Capital
• Temasek Holdings