Hidden Hill Capital, the private equity arm of global investment manager GLP, has invested 745 million yuan ($114 million) in airline giant China Southern Airlines’ subsidiary China Southern Airlines Cargo Logistics (Guangzhou) Co., Ltd, according to a company statement on Wednesday.
Post the transaction, Hidden Hill Capital will own a 10 per cent stake in China Southern Airline Logistics, while China Southern Airlines will remain as its controlling shareholder.
The logistics company’s market valuation will jump to 1.82 billion yuan ($278 million), up 820 million ($125 million), post the transaction.
China Southern Airline Logistics said it will deploy the funding proceeds to upgrade its air cargo capacity and ground logistics infrastructure construction. It will also aim to build better synergy between air and ground transportation in the aviation logistics industry.
China Southern Airlines Logistics, which was set up by China Southern Airlines in 2018, operates a global freight business. The company has provided cargo services to 243 destinations in 44 countries and regions through over 3,000 flights a day.
“When we pursue mixed-ownership reform, we are seeking valuable insights and a vision to improve corporate governance and procedures to enhance our international competitiveness. We choose partners that understand the various elements of the logistics ecosystem and bring us a great wealth of knowledge that we can leverage across our four major business sectors — air cargo, modern warehousing, supply chain management, and e-commerce,” said He Xiaoqun, chairman of China Southern Airlines Logistics, in the statement.
The investor, Hidden Hill Capital is a two-year-old firm. As a part of GLP, it is designed to invest in the logistics ecosystem including smart logistics, supply chain, logistic service, cold chain, and corporate ownership reforms. It has poured more than 6 billion yuan ($917 million) into about 50 startups such as China Eastern Airlines’ Eastern Air Logistics, Cosco Shipping, and Inceptio so far.