CITIC Capital invests $20m in New Zealand travel business

The Chinese private equity firm is investing via a vehicle known as the International Tourism Fund at a price of NZ$4.02 per share. The stock climbed 2% to NZ$4.10 following the investment and was trading at that price as of midday June 24.

The transaction increases CITIC Capital’s stake in the company from about 12% to 17% and allows the GP to nominate a member of the board. The investment will be leveraged to help the company expand into China. Tourism Holdings is supporting this effort through a separate NZ$50 million rights offer.

Founded in 1986, Tourism Holdings positions itself as a leading car, motorhome, and campervan rentals provider in New Zealand, as well as a diversified services provider in areas such as helicopter tours, backpacking, and rafting. Operations extend significantly into Australia and the US. The company also has interests in two motorhome manufacturing plants across New Zealand and Australia.

In addition to a Chinese expansion, Tourism Holdings plans to expand its technological capabilities through a joint venture with US-based recreational vehicle maker Thor Industries. This will include software investments with an emphasis on asset-light and scalable business models. Bolt-on acquisitions across North America, Australasia, and Europe will also be considered.

Revenue improved 25% during financial 2018 to NZ$426 million, with New Zealand, Australia and the US representing 42%, 19% and 39% of the total, respectively. Net profit increased 107% on the year to NZ$62.4 million, including a NZ$23.1 million one-off gain that resulted from the partnership with Thor. Net profit is expected to be about NZ$25 million in financial 2019, according to a release.

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