Fosun, a Chinese conglomerate perhaps best known as the company which acquired French tourism giant Club Med, hasn’t been shy about its ambitions in the tourism industry. And unlike many of China’s well-known conglomerates, Fosun also hasn’t been shy about continuing to invest aggressively in the international market—largely in the tourism industry. Now, the company is looking to spin off its tourism and culture operations altogether as Fosun Tourism and Culture Group, or FTC Group for short.
On the international stage, Fosun has been eying “aggressive” expansion in North America—perhaps an attempt to diversify from Asia and Europe (the latter of which largely came with the acquisition of Club Med). Back in May of this year, Senior Vice President of Fosun International, Qian Jiannong, asserted “We’re interested in anything related to the tourism sector, from travel agencies and resort brands to recreational content providers.” Qian did not believe that ongoing trade tensions with the United States would affect any potential investment targets.
Fosun is particularly interested in expanding in the North American tourism sector
However—and likely to Chinese regulators delight—Fosun has been keen to invest in the domestic market as well. Notably, Fosun’s Club Med announced that it would aggressively expand in China, targeting 20 resorts near major Chinese cities by 2020. Fosun is also one of the main contributors to the so-called Hainan tourism free-trade zone, investing some $1.74 billion in the recently opened Atlantis, Sanya, arguably the most ambitious attempt thus far to transform the island of Hainan into an internationally competitive luxury tourism destination worthy of being labeled as “China’s Hawaii.”
Fosun is also a major shareholder of Europe’s second-largest travel group, Thomas Cook, and increased its stake in the company as recently as in 2017. Fosun also owns 51 percent of a joint venture with Thomas Cook in the Chinese market.
In fact, a $500 million IPO of Fosun’s tourism and culture division was first reported in 2017 and rumored to happen sometime in 2018. In a so-called voluntary announcement made to Hong Kong-listed Fosun’s investors, the company last week indicated that it would indeed attempt to spin off its tourism and culture subsidiary. According to the statement, Fosun had submitted an application to that effect to the Hong Kong Stock Exchange which in turn gave its green light for Fosun to proceed with the proposed spinoff.
A $500 million IPO was rumored back in 2017
What exactly that would mean for Fosun’s tourism ambitions isn’t exactly clear at this time, but if the rumored $500 million figure turns out to be accurate, the spinoff could generate significant funds for Fosun to capitalize on tourism and culture business opportunities it sees around the world. The spinoff could also help Fosun isolate its aggressively expanding tourism and culture subsidiary from other businesses the conglomerate is active in, ideally avoiding a convoluted corporate structure like that of troubled peer HNA Group—where few units seem able to avoid the fallout of other business units mistakes.
If Fosun manages to succeed where HNA failed remains to be seen. However, it’s safe to say that the former’s investments in Club Med resorts in China and the Atlantis, Sanya look a whole lot more measured than the latter’s $7.5 billion app. On the other hand, making wiser business decisions than HNA is a pretty low bar. Hopefully, Fosun Tourism and Culture Group can raise the bar for Chinese tourism giants. It goes without saying that both investors and creditors would be all the better off for it.