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Nikkei Markets

Fosun Tourism falls 4% in Hong Kong trading debut

Club Med owner ranks as year's 13th-biggest IPO on local stock exchange

Fosun Tourism Group intends to use the IPO proceeds to expand and develop existing businesses and projects.   © Reuters

HONG KONG (Nikkei Markets) -- Fosun Tourism Group's stock tumbled 4% in its first day of trading on Friday, after the tourism and leisure-services company raised 3.34 billion Hong Kong dollars ($427.6 million) from an initial public offering. It was the 13th largest IPO in Hong Kong this year, according to Dealogic.

The stock closed at HK$14.98 on the Hong Kong Stock Exchange, compared with its IPO price of HK$15.60, with volume of 21.66 million shares. The company, a unit of Hong Kong-listed Chinese conglomerate Fosun International, had offered 214.2 million shares, which were priced at the bottom end of an indicative range of HK$15.60 to HK$20 each.

Several high-profile Hong Kong IPOs have seen weak performances this year, amid a global downturn in equity markets. Chinese smartphone maker Xiaomi and mainland online booking platform Meituan Dianping both are trading below their initial offering prices.

Fosun Tourism operates resorts including Club Med, which it acquired in 2015. A consortium led by Fosun International purchased Club Med, which accounted for nearly all of Fosun Tourism's revenue and profit last year, for 916 million euros ($1.04 billion at current exchange rates).

While the offering prospectus for Fosun Tourism showed it has been profitable at an operating level since 2016, Club Med has posted net losses since 2013 due to interest expenses. Last month, however, the chairman and chief executive of Fosun Tourism, Qian Jiannong, said that the company returned to the black in the first nine months of this year. He did not provide figures.

Fosun Tourism is also involved in the development and operation of the Sanya Atlantis resort on China's island province of Hainan, as well as other tourism destinations. The company intends to use the IPO proceeds to expand and develop existing businesses and projects, repay a portion of its debt and meet working capital needs.

J.P. Morgan Securities, CLSA Capital Markets and Citigroup Global Markets Asia served as joint sponsors for the offering.

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