China Fosun's tourism unit eyes fundraising for overseas M&A: president

HONG KONG (Reuters) - China’s Fosun is in talks with investors to raise funds for its tourism unit’s planned overseas acquisitions, looking to build up the business even as regulators closely scrutinize outbound transactions, the unit’s president said.

FILE PHOTO - Club Med banners blow in the wind beside the swimming pool at the Club Med Punta Cana vacation resort in the Dominican Republic, March 3, 2016. REUTERS/Charles Platiau/File Photo

Fosun Tourism & Culture Group, a key profit growth business for China’s largest private conglomerate, is in discussions with domestic and international investors for its first round of capital raising to boost overseas investments ahead of a public listing, said Qian Jiannong.

The unit includes resort operator Club Med, a Chinese joint venture with tour operator Thomas Cook Group TCG.L and the ultra-luxury Atlantis Resort Hotel in the southern Chinese seaside city of Sanya.

“We will increase (overseas) investment in the next few years and the area or regions that are most important for us are really not only where Chinese people have an interest in, but also the global regions where the tourism business is attractive,” Qian told Reuters in an interview.

“We have been in talks with many companies since 2010. Currently, we are also talking to a few companies, but I can’t comment on any potential deals and projects at this stage.”

After a record year for outbound mergers and acquisitions by Chinese companies in 2016, Beijing has placed curbs on capital outflows to reduce pressure on the yuan currency, which fell to eight-year lows in December.

That won’t present a hurdle to Fosun’s growth ambitions, according to Qian.

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“Fosun, as a global enterprise, won’t be affected by such restrictions because we have enough offshore capital to conduct M&A deals overseas,” he said.

“If it’s an overseas target, we will definitely use our offshore platform to acquire it. We have units incorporated abroad and at home.”

Asked about a timeline for a listing, Qian said none had been set for Fosun Tourism. But Fosun 0656.HK, controlled by billionaire co-founder Guo Guangchang, encourages its different units "to go public at an appropriate time", he said.

Tourism is key to China’s shift toward a more consumer-driven economic growth, with companies including Fosun, Dalian Wanda Group Co and HNA Group increasing their bets on the sector. The domestic tourism industry raked in 3.9 trillion yuan ($567.3 billion) in 2016, which Beijing wants to rise to 7 trillion yuan by 2020, official news agency Xinhua has said.

China will account for 14 percent of total global outbound travel by 2020 from 10 percent now, brokerage CLSA has forecast, with the number of Chinese overseas trips rising to 200 million a year at the end of the period from 125 million in 2015.

For Fosun, the tourism unit is part of its “happiness” segment, which saw profits for the six months ended June 2016 soar 76 percent to 365.4 million yuan, surpassing the 25.5 percent increase in the conglomerate’s health segment and the 13.7 percent gain in the wealth management segment over the same period.

Only the investment and property development segments, which saw profits double and rise more than 600 percent, respectively, experienced faster growth.

Club Med, which Fosun bought in 2015, plans to open at least 20 new resorts in China over the next few years, Qian said without specifying the timeline for the buildup.

The tourism unit has an inhouse investment team of 26 people scouring the world for leisure tourism targets including hotel brands, travel agencies and theme parks, he said.

“Definitely we still have the investment teams in our new group and they’re still searching some new targets to buy and also find some companies that maybe we won’t merge with or acquire them, but we can have very good cooperation with them,” Qian said.

Reporting by Julie Zhu and Elzio Barreto; Editing by Muralikumar Anantharaman