Ocean Link, reported to be the first private equity (PE) firm focused on the fast-growing travel and tourism sector in China, has entered into a strategic partnership with Ctrip, China’s largest online travel agency, and growth equity firm General Atlantic.
Founded in early 2016, Ocean Link deploys both RMB- and USD-denominated funds in strategic investments across the sub-verticals of the travel and tourism industry in China. This includes hotels and resorts, online and offline travel agencies and operators, transportation services, and business solutions providers.
Initial investments include mobile and online travel agency eLong; educational tour and summer camp provider Mind Education; and Europe-based ‘lean luxury’ hotel chain Ruby Hotels, which is targeting expansion in Asia.
General Atlantic has been investing in China since 2000 and has forged partnerships with other firms in the travel and tourism sector. These include Airbnb, Aimbridge Hospitality, Decolar, FlixBus, IBS, Priceline, Smiles, and Uber.
As a result of the new strategic partnership, Ctrip and General Atlantic both have the right to appoint a director to the board of Ocean Link.
Commenting on the strategic partnership, James Liang, Co-Founder, Chairman, and CEO of Ctrip, said, “The travel and tourism sector in China is at a pivotal period of growth. The industry’s ongoing transition will provide Ocean Link with ample opportunities to bring capital and operational expertise to innovative companies serving the rising number of travelers in this market.”
“Leveraging the insights and experience of Ocean Link’s investment team and the support from Ctrip and General Atlantic, we will aim to identify attractive investments in the rapidly expanding travel and tourism sector,” Liang added.
The investment comes at a time when increasing consumption and changing consumer habits are altering the contours of China’s economic landscape towards a service-based economy and away from manufacturing, also raising questions on how successful such a shift would be.
In an official statement, Alex Zheng, a partner at Ocean Link, noted: “As Chinese entrepreneurs seek capital from investors who truly understand their businesses, Ocean Link is uniquely positioned to be a partner of choice. Our focus on the travel and tourism sector enables us to provide differentiated industry and operational capabilities to help create value for high quality companies across the sector ecosystem.”
Data from the China National Tourism Administration shows that from 2014 to 2015, total number of Chinese residents travelling domestically rose 10.5 per cent to 4 billion, while those travelling internationally grew 12 per cent to 120 million.
In addition, outbound tourism from China is expected to double from 120 million in 2015 to 220 million in 2025, according to Goldman Sachs Global Investment Research from November 2015.
“General Atlantic is pleased to bring our global expertise and deep experience working with growth companies to our partnership with Ocean Link and its portfolio companies.” said Eric Zhang, Managing Director and Head of China at General Atlantic.