General Atlantic backs China tourism-focused firm

Investment firm Ocean Link has already made four investments in China’s $250bn-plus tourism sector using capital from the global growth equity firm and a consortium of other investors.

Global growth equity firm General Atlantic and Chinese online travel agency Ctrip are the cornerstone investors in a vehicle managed by Ocean Link, a Chinese travel focused investment platform.

The firms’ individual investments were not disclosed, but Ocean Link is starting with an initial $400 million of capital pooled from General Atlantic, Ctrip, as well as some institutional investors and high net worth individuals, a source familiar with the situation told Private Equity International.

Ocean Link – the first private equity firm focused on China travel and tourism, according to the firm’s statement – was founded in March 2016 by former Carlyle director Tony Jiang and co-founder of Plateno Hotels Group Alex Zheng in order to capture opportunities in China’s rapidly expanding travel and tourism sector.

The firm is raising two parallel funds, one in yuan and one US dollar-denominated, to invest in hotels, online and offline travel agencies, as well as transport services and related businesses. Its current investments include travel agency eLong, educational and tours and summer camps provider Mind Education, data analytics provider for Chinese hotels Joint Wisdom, and Europe-based hotel chain Ruby Hotels. The firm has also reportedly offered to buy all outstanding shares of US-listed Chinese travel site Qunar.

China’s travel and tourism industry contributed CNY 1.6 trillion ($250 billion; €216 billion) to the country’s total gross domestic product in 2014. That figure is forecast to rise to CNY 3.1 trillion in 2025, according the World Travel and Tourism Council.

Chinese travel demand has grown rapidly over the last decade spurred by robust income growth, the expansion of China’s middle class, and simpler visa policies. According to data from the China National Tourism Administration, domestic travel rose 10.5 percent to 4 billion from 2014 to 2015, while international travel jumped 12 percent to 120 million.

Other private equity firms who have investments in China’s travel and tourism sector include London-based Actis Capital and Beijing-based Hony Capital.

General Atlantic has been investing in China since 2000. The firm has also committed capital to travel and tourism companies worldwide including home rental service Airbnb, e-commerce system Priceline, and ride hailing company Uber.