Hopu invests $119m in Chinese airport operator

The private equity firm will subscribe to 200 million new shares issued by Regal, paying HK$4.69 apiece, according to a filing. This will give it 44.86% of the company’s Hong Kong-listed H-shares and 22.84% overall. The pricing represents an 8.4% discount to the September 27 closing price. The stock spiked at HK$5.45 on September 20 but then dropped back, closing at HK$4.88 on September 30.

The proceeds will go towards expansion, improvement and maintenance of the existing airport buildings, technology upgrades with a view to creating a “smart airport,” and staffing needs.

Haikou Meilan International Airport opened in 1999. As of year-end 2018, it had 257 domestic and 42 international routes. Passenger throughput for the year was 24.1 million – the 17th highest among civil airports in China – 165,186 flights took off and landed, mail volume was 324,697 tons. The terminal complex includes a hotel, shopping and entertainment areas, and a food court.

Revenue from the aviation business, comprising passenger service charges, ground handling service fees, and aircraft takeoff and landing fees, was RMB915.1 million ($117 million), up 10.7% year on year. The company generated an additional RMB788.8 million – up 22.6% year on year – from advertising, freight and packaging, rental, VIP rooms, car parking, and the hotel. Net profit for 2018 was RMB628.4 million, up from RMB492.9 million in 2017.

Regal’s parent company bears the same name as that of the airport. Its shareholders include the Civil Aviation Administration of China and several HNA subsidiaries, including Hainan Airlines. Until last year, Regal was known as HNA Infrastructure.

HNA 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.

The company 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. Earlier this year, RRJ Capital agreed to take full ownership of Gategroup, an airline catering provider owned by HNA.

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• Topics
• Greater China
• Real estate
• PIPEs
• China
• HNA Group
• Hopu Investment Management
• Logistics