HNA invests $500m in PE-backed China tour operator Tuniu

According to a statement, the tourism unit of HNA Group purchase newly-issued stock from Tuniu at $16.50 per American Depositary Share (ADS). This represents about a 5% premium to the closing price on November 20, the last trading day before the deal was announced.

The transaction, which is expected to be completed in December, will see HNA become the largest shareholder in Tuniu.

As part of the agreement, HNA Tourism will give Tuniu access to its airline and hotels at preferential rates. Tuniu is also expected to acquire no less than $100 million in products and services sourced from HNA Tourism over the next two years.

Beijing-based HNA Tourism was founded in 2007 and owns China's fourth-largest airline, Hainan Airlines. It also operates hotels, travel agencies, online services and other tourism investment businesses. Last year, it had total assets valued at about $18 billion and an annual turnover of more than $5 billion.

"We look forward to collaborating with Tuniu in order to bring more of our products to leisure travelers throughout China. At the same time, we will fully support Tuniu as it continues to expand its market share in the leisure travel market in China," Zhang Ling, chairman of HNA Tourism, said in the statement.

The HNA deal comes six month after Tuniu raised $500 million through a private placement to Chinese e-commerce giant JD.com and several of its existing PE and VC backers. They included Hony Capital, DCM Ventures, travel booking site Ctrip, Temasek Holdings and Sequoia Capital.

Last December, Hony and JD led a $148 million round of funding for Tuniu, each purchasing $50 million in new shares. Ctrip invested $15 million and the company's CEO and COO put in $16.5 million apiece.

The initial plan was to raise $100 million through a public offering, but then Tuniu's share price dropped sharply - said to be the work of short-sellers - and it was decided that a private round would be the best course of action.

Tuniu, which was set up in 2006, focuses on packaged tourism, providing lead generation to the offline tourism agencies that have traditionally dominated the space. The company, which went public last May, sold 2.18 million organized and self-guided tours in 2014, up from 1.28 million the previous year.

It has 75 service centers located in 73 cities across China and a team of 650 tour advisors. Revenue came to RMB3.53 billion ($569.7 million) in 2014, compared to RMB1.95 billion in 2013. However, net losses widened from RMB79.6 million to RMB447.9 million.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• PIPEs
• Technology
• Consumer
• China
• TMT
• PIPE
• Consumer
• Hony Capital
• DCM-Doll Capital Management
• Temasek Holdings
• Sequoia Capital