May 2, 2018 / 7:46 AM / 5 months ago

China's Fosun eyes global tourism deals, shrugs off crackdown

SANYA, China/SHANGHAI, May 2 (Reuters) - Fosun International Ltd’s tourism arm is hunting for more overseas deals to grow its leisure vacation business, the unit’s chief told Reuters, adding that a recent crackdown on conglomerates’ was actually helping the firm.

Fosun, one of the country’s most acquisitive overseas dealmakers, threw open on Saturday its $1.74 billion Atlantis Sanya resort, looking to lure domestic and foreign tourists to the Chinese island of Hainan, the country’s Hawaii.

Qian Jiannong, chairman and president of Fosun’s Tourism & Cultural Group, said that a recent squeeze on overseas deals - that has stymied conglomerates including Dalian Wanda Group and HNA Group - had actually played in Fosun’s favour.

“If some companies are told to rectify due to irregularities, that gives more strength to the others such as Fosun,” Qian told Reuters at the Sanya resort on Sunday. He did not name the companies.

The government crackdown on debt has had a stark impact in China. HNA has been on a selling spree this year to raise funds, while Wanda offloaded billions of dollars of tourism and entertainment assets last year to reduce its debt load.

“Rational investment means companies need to follow market rules and China’s industry policy,” added Qian. “If everyone fights for one meaningless, expensive, and low-return investment target, and brings financing risks, that would be irrational.”

Fosun, co-founded by China’s self-styled Warren Buffett Guo Guangchang, has escaped Beijing’s battle on debt relatively unscathed. The tourism unit is now looking for investment targets in Asia, Europe and the Americas, Qian said.

The unit, an important profit growth driver for Fosun, controls French resort operator Club Med, and has a stake in British travel firm Thomas Cook Group.

Qian added he wanted to make the Sanya resort a one-stop-shop for the country’s deep-pocketed middle class tourists looking for a getaway as the world’s second-largest economy shifts to a consumption-driven economy.

Fosun spun off the tourism unit in 2016, paving the way for a potential initial public offering, which Thomson Reuters publication IFR reported could raise at least $500 million.

After the spin off, a restructuring of the newly created tourism group has continued. The unit may also take on other related assets to gain assets along the whole industry chain of the vacation market, he added.

Qian added any listing plans would depend on capital market conditions and the restructuring.

Fosun’s annual profit jumped 28.2 percent to a record high in 2017, its fastest growth in four years, on the back of stronger growth from its core operations and successes in exiting and listing several investments.

On the company’s outlook, Qian said he felt there was little competition facing the firm. “If you are at the forefront of an industry, you have few competitors. I think we have no competitor, except us,” he said. (Reporting By Shu Zhang in SANYA and Adam Jourdan in SHANGHAI; Editing by Muralikumar Anantharaman)

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