China's HNA Group agreed to buy London-based currency exchange operator International Currency Exchange from Lenlyn Holdings for an undisclosed amount on Friday. The transaction remains subject to customary regulatory and other approvals and consents.
The takeover, made through its wholly-owned subsidiary HNA Tourism, marks HNA Group's second bid for European assets within a week and continues its wider policy of foreign acquisitions. On Monday, it announced a $1.5 billion all-cash offer to acquire Gategroup, the Zurich-based airline catering and hospitality services company that was divested from Swiss Air when it went bankrupt in 2001.
Two months ago HNA Group, headquartered in the southern island of Hainan, bought California-based electronics distributor Ingram Micro for $6 billion, and in July 2015 snapped up ground-handing services provider Swissport International for $2.8 billion and Ireland-based jet leasing company Avolon Holdings for $2.6 billion.
Dr. Zheng Lei, a scholar at the U.K.'s University of Surrey, said he was not surprised to see ICE being purchased by HNA Group, given the acquisitive conglomerate's long-term plan to optimize its value-chain along the nexus between travel, tourism and aviation. It has completed 34 overseas mergers and acquisitions projects in recent years -- an operation that a source close to the company said was being overseen by a dedicated arm in Hong Kong.
Thanks to its global buying spree, HNA Group saw its revenue in 2015 surge 36% to 190 billion yuan ($25.64 billion) from the previous year -- a performance that has made it a case study at Harvard Business School in the U.S.
From its beginnings in 1993 as Hainan Airlines, which is now China's fourth largest airline by fleet size, the group has branched out into logistics, technology, financial services, retail, entertainment and real estate development. It boasts total assets of 600 billion yuan, with 11 listed companies as of 2015. Chairman Chen Feng is a former government official with the Civil Aviation Administration of China.
According to the prospectus for the group's 2 billion yuan renewable corporate bond issue, published on April 6, HNA reported it had 11.85 billion yuan outstanding of onshore debt instruments, 8.4 billion yuan of financial leases and 10.88 billion yuan of trust borrowings.
Of the 31 acquisitions that HNA Group has reportedly made since 2013, which totaled at least $10 billion, 21 were outbound in nature, with countries in Europe dominating the group's choice of destinations, data from Dealogic shows. Many of these target assets are linked to the aviation and tourism sectors, including hotels, airports, cargo services and aircraft leasing.
In March, HNA Group reportedly failed twice in its attempts to acquire Ansett Worldwide Aviation Services, an Irish commercial aircraft leasing company, following an unsuccessful 2 billion pounds ($2.8 billion) bid for London City Airport.
In the same vein, ICE believes the merger with HNA Group will mark "the next phase" of its "growth story," and provide "great opportunities for future expansion," according to Koko Sarkari, the forex operator's chief executive officer.
Brekelmans said these international acquisitions might create "pretty good synergies" from the perspective of China's outbound tourism market as they allow the company to capture more value from Chinese travelers. A similar strategy can be seen from China's Fosun International, which bought U.K. tour manager Thomas Cook and French holiday company Club Mediterranee last year.
Europe was the top destination for Chinese outbound investment in the first quarter of this year, according to Dealogic, attracting a total of $59.3 billion from 61 deals, topping North America's $26.43 billion from 49 transactions.
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