Bottom line: Bilibili and iQiyi are likely to price in the middle of their ranges and debut flat to up slightly when their IPO shares start trading this week in the US.
iQiyi, Bilibili set for weak debuts?
This week is shaping up as one of the busiest I can recall for New York IPOs by Chinese firms, with at least four major listings set to take place. The first of those sputtered out of the gate on Tuesday, with hotel operator Greentree (NYSE: GHG) dropping 7 percent in its trading debut after pricing weakly and slashing the size of its offering. That less-than-stellar showing comes just days after another non-tech offering fizzled with the new listing of education specialist Sunlands (NYSE: STG) late last week.
Those weak signals could bode poorly for the three more IPOs set to take place later this week, including a launch for online video sites Bilibili and iQiyi on Wednesday and Thursday, the latter of which could raise more than $2 billion. In between that pair will be another education firm, OneSmart, which is set to debut on Wednesday. Read Full Post…
Bottom line: HNA’s $6.5 billion investment in Hilton marks a new high point in Chinese global hotel buying, and signals the trend may be cresting and a downturn could come next year.
HNA invests in Hilton
After I said just last week that China’s recent buying binge of foreign hotels may have crested, we’re seeing yet another blockbuster deal that seems to support that thesis. This latest deal is the biggest to date, and has the acquisitive HNA Group buying 25 percent of US hotel giant Hilton (NYSE: HLT) for about $6.5 billion. That would easily eclipse the other recent blockbuster deal announced just last week, when insurance giant China LIfe (HKEx: 2628; Shanghai: 601628; NYSE: LFC) said it was leading a Chinese group that would invest $2 billion in a portfolio of lower-end US hotels. (previous post) Read Full Post…
Bottom line: China Life’s $2 billion investment in a US hotel portfolio could mark the height of a bubble of Chinese offshore hotel buying, and high asset values could start to deflate by the end of next year.
China Life buys into US hotel portfolio
Move over, Anbang. China’s largest insurer China Life (HKEx: 2628; Shanghai: 601628; NYSE: LFC) is joining a recent love affair between Chinese investors and overseas hotels, with the announcement that it’s leading a group investing in $2 billion worth of properties in the US. People following the trend will know that unlisted insurer Anbang has been leading this overseas charge, with its recent purchase of a US hotel portfolio for $6.5 billion and its failed bid earlier this year for hotel operator Starwood (NYSE: HOT). Read Full Post…
Bottom line: Jin Jiang’s $260 million investment in WeWork is part of the Chinese company’s global expansion, and could see the pair work together to accelerate a move of the shared office concept into China.
Shared office specialist gets backing from Jin Jiang
After getting a chilly reception in the US and France, Chinese companies eager to buy western hotel brands may be taking a different approach in their bid to go global. That appears to be the bottom line in a new move by state-run Chinese hotel giant Jin Jiang (HKEx: 2006; Shanghai: 600754), which has reportedly just invested $260 million in US shared office space operator WeWork.
Foreign hotels have become a flavor of the day for Chinese buyers looking to expand beyond their home market and import foreign expertise to improve their own operations. In addition to brands, Chinese companies have also developed a taste for big-name foreign hotels, led by the purchase of New York’s storied Waldorf Astoria by state-owned Chinese insurer Anbang nearly 2 years ago for an eye-popping price of nearly $2 billion. Read Full Post…
Bottom line: New quarterly earnings data show that China’s travel industry is on the cusp of a slowdown likely to last for at least the next 2 years, while a major new fund set up by Ctrip shows the sector still has strong longer-term growth potential.
Ctrip-backed Ocean Link launches $400 mln travel fund
A couple of items from the travel space are casting a spotlight on the risks and rewards of China’s travel sector, which has huge potential but is also susceptible to economic cycles. Highlighting the big potential is word of a new $400 million fund being launched by leading online travel agent Ctrip (Nasdaq: CTRP) and US private equity firm General Atlantic to invest in Chinese travel-related projects. Meantime, the downside was showing up in the newest results of BTG Hotels (Shanghai: 600258), whose first-half profit plunged after its recent buyout of budget hotel specialist Homeinns. Read Full Post…
Bottom line: China Lodging’s revenue growth could slip into single digits by the end of the year and could start to contract in 2017, as China’s hotel industry corrects after years of strong growth.
China Lodging assists franchisees
Overbuilding and a slowing economy are taking a toll on one of China’s leading hotel operators, which has just revealed it is slashing some of the fees it charges to its franchising partners as they struggle for business. The revelations by China Lodging Group (Nasdaq: HTHT), also known as Huazhu, bode poorly for China’s broader hotel industry, which is suffering a hangover following explosive growth over the last 2 decades. Investors greeted the downbeat news by selling off China Lodging shares, which closed down 2.4 percent and have lost more than 12 percent of their value since the end of March. Read Full Post…
Bottom line: Jin Jiang is likely to ultimately drop its pursuit of Accor and sell its entire stake in the French hotelier, which is showing signs of growing uneasiness in an unwanted courtship by its Chinese suitor.
Jin Jiang contemplates upping its Accor stake
Leading Chinese hotelier Jin Jiang (HKEx: 2006; Shanghai: 600754) and worldwide peer Accor (Paris: AC) are becoming increasingly uncomfortable bed mates, with word that the former may want to boost its stake in the latter. This particular alliance was engineered by the state-run Jin Jiang, which early this year acquired 5.5 percent of Accor by purchasing shares of the French hotel operator in the open market. Jin Jiang later upped that stake to nearly 12 percent, though again it’s not clear if it bought the shares with the approval of Accor, operator of the upscale Novotel and Sofitel brands.
The history of this relationship, combined with overtones in the latest reports, all hint at an uneasy courtship that is taking place between these 2 companies. Jin Jiang is clearly interested in Accor’s global background and expertise, as it embarks on a recent buying spree in an attempt to build China’s first worldwide hotel company. But Accor seems far less interested in being pursued by Jin Jiang, probably because its suitor is an unfamiliar company with very little experience running a global brand. Read Full Post…
Bottom line: A veto threat by China’s insurance regulator ultimately killed Anbang’s bid for Starwood, but the Chinese insurer is likely to pursue more mega-purchases in the more traditional overseas real estate sector this year.
Starwood abandoned at altar by Anbang
In a sudden and unexpected turn in the bidding war for hotelier Starwood (NYSE: HOT), Chinese suitor Anbang has suddenly bowed out of the contest without explanation, paving the way for a merger with US suitor Marriott (NYSE: MAR). Many are marveling at this sudden turn of events, since Anbang earlier this week had submitted an all-cash bid that was 6 percent higher than Marriott’s latest offer for Starwood, operator of the Sheraton and Westin hotel brands.
But anyone in China might say they saw this coming, based on a couple of local media reports from sources at Anbang and China’s insurance regulator. The first of those reports came last week, and saw one of China’s top financial media report that the Chinese insurance regulator was likely to veto a deal over concerns about the size of the investment. That was followed by another report based on comments from an Anbang insider this week, saying the regulator would have no grounds to veto such a deal. Read Full Post…
Bottom line: Marriott stands a 60-40 chance of having its bid for Starwood approved at an April 8 shareholder vote, since a competing Anbang proposal could face the strong possibility of rejection by China’s insurance regulator.
Anbang confident of Beijing will approve Starwood bid
A series of new reports and data on Chinese insurer Anbang are showing why the company is confident it can get regulatory approval from Beijing in its heated bidding war for Starwood (NYSE: HOT), operator of the Sheraton and Westin hotel brands. I also expect that the US regulator would have little or no reason to veto such a deal on national security grounds, since Starwood really doesn’t handle any sensitive information as hotel operator.
Thus from a regulatory perspective, if the latest Chinese reports are correct, it does look like Anbang would be able to get the necessary regulatory approval from both Washington and Beijing to buy Starwood for $14 billion in its ongoing bidding war with Marriott (NYSE: MAR). But the reports coming from China are quite contradictory, reflecting a potential looming clash between Anbang and China’s conservative insurance regulator. Read Full Post…
Bottom line: Anbang is likely to drop its pursuit of Starwood due to objections by Beijing, leaving Marriott as the winner in their brief but frenzied bidding war.
Anbang forced to choose between Starwood and Strategic Hotels
Just a day after I predicted that aggressive Chinese insurer Anbang would make a counter-offer in its bidding war with Marriott (NYSE: MAR) for US hotel giant Starwood (NYSE: HOT), a new report is saying such a bid would almost certainly get vetoed by Beijing regulators. That’s an important new element in this story, since Beijing must approve all global acquisitions of this size by Chinese companies.
This particular move is a bit unexpected, since Anbang almost certainly would have gotten Beijing’s permission before launching its surprise bid earlier this month for Starwood, operator of the Westin and Sheraton brands, which had agreed last year to be bought by Marriott. But in an important twist to the story, Anbang also recently opened talks to pay $6.5 billion for a portfolio of US luxury hotels owned by Strategic Hotels & Resorts. (previous post) Read Full Post…
Bidding wars follow certain principles, but the recent battle for US hotel operator Starwood (NYSE: HOT) between local rival Marriott (NYSE: MAR) and Chinese insurer Anbang is quickly diverging from one of the most central rules. In a move that surprised many, including myself, Anbang has suddenly upped its bid for Starwood, increasing its original offer that was already 12 percent higher than Marriott’s original and only bid dating back to last year.
In all my years of covering M&A and bidding wars, this is the first time I can recall of a company increasing its own bid that wasn’t in response to a rival counter bid. The strange move probably reflects Anbang’s worries that its original offer might get rejected by Starwood, which I previously predicted would choose Marriott as a more dependable partner despite its lower offer. Now we’ll have to wait to see if Marriott responds by raising its original offer, which is now about 15 percent lower than Anbang’s latest bid. Read Full Post…
