Hopu set to invest $119m in Chinese airport operator Regal Group

Source: Haikou Meilen International Airport's Sina Weibo official account

Chinese private equity firm Hopu Investments is set to invest HK$933 million ($118.97 million) in Regal International Airport Group, the operator of Haikou Meilan International Airport in southern China’s island province of Hainan.

Hopu Investments will subscribe to 200 million new shares issued by Regal Group at a price of HK$4.69 apiece, accounting for 44.86% of the firm’s Hong Kong-listed H-shares, according to a document filed with the Hong Kong stock exchange on September 30.

The investment will bring in “a long-term strategic investor”, who can add value to Regal Group and in the development of the Meilan Airport, said Regal Group in the filing.

“Hopu Investments has invested in a series of complementary airport-related investments, including companies in the logistics, car parking, technology, and financial services sectors, with which the company [Regal Group] can benefit through greater cooperation,” the firm added.

As part of the agreement, Hopu Investments will have the right to appoint the COO and deputy CFO, which will support Regal Group to capture opportunities from the phase II expansion of Meilan Airport, according to the filing.

About 33% of the net proceeds from the deal will be used for introducing innovative technology and upgrading Meilan Airport into “a smart airport.” Approximately 29% will be used for expansions, upgrades, improvements and maintenance of Meilan Airport’s existing terminal buildings and other areas.

The rest of the proceeds will be used for the acquisition of staff quarters and other associated facilities, as well as replenishment of the working capital.

Hopu Investments was founded in 2008 by Chinese investment banker Fang Fenglei and former KPMG chairman Dominic Ho. The company primarily invests in sectors such as infrastructure, consumer, technology, healthcare, financial services, logistics and real estate. It has offices in Beijing, Hong Kong, Singapore and Shenzhen.

The investment has come in as the Chinese private equity major and Hillhouse Capital Group are in race to acquire a 15% stake in Gree Electric Appliances, the state-owned controlling shareholder of the largest home appliance manufacturer in China. Gree plans to sell 902.35 million shares at 44.17 yuan ($6.18) apiece, which amounted to a total deal size of 40 billion yuan ($5.6 billion).