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Airline caterer gategroup Holding plans IPO

Airline caterer gategroup Holding AG on March 6 said it planned to list on the Swiss stock market as its Chinese owner continues to raise cash amid a liquidity crunch.

In a statement posted on its website, gategroup said the initial public offering on Zurich-based SIX Swiss Exchange would take place at the end of the first quarter or in the second quarter of 2018.

The company, among the world's largest providers of airline catering, retail on board and hospitality products and services, added that the IPO is aimed at achieving a free float of about 65% of all shares, assuming full exercise of an overallotment. The primary listing is expected to generate proceeds of about CHF350 million for gategroup, which the company said would be used to complete the acquisition of Servair from Air France-KLM, to fund its pension plans and for other corporate purposes.

"Through the successful execution of its Gateway 2020 strategy, gategroup has turned into a highly focused company that has significantly increased its geographical scope, in particular in emerging markets," it said. Gateway 2020 is a five-year plan focused on customer innovation, delivering growth and efficiencies, and enhancing profitability and cash flow.

Gategroup employs about 43,000 staff and serves more than 700 million passengers annually from over 200 operating units in 60 territories. According to its statement, gategroup's net profit in 2017 more than doubled year over year to CHF85.2 million as revenue jumped 35% to CHF4.6 billion. EBITDA climbed more than 50% year over year to CHF300 million. It did not provide comparison figures for 2016.

The Zurich-based company was founded in 1992 as the catering division of Swiss airline Swissair. The carrier went into receivership in 2001, and the catering business, then known as Gate Gourmet, was sold in 2002 to private equity firm Texas Pacific Group, which rebranded it as gategroup. The business was floated on the Swiss exchange in 2009 and acquired in 2016 for an equity value of about CHF1.4 billion by HNA Aviation (Hong Kong) Airline Catering Holding Co. Ltd., a subsidiary of China's HNA Group Co. Ltd.

Gategroup said HNA Aviation (Hong Kong) Airline Catering Holding intended to sell the majority of its holding and has indicated that it planned to remain as a long-term anchor shareholder.

"We are proud of the significant progress gategroup has made over the past two-and-a-half years," HNA Group CEO Adam Tan was quoted as saying. "The company stands on a very solid foundation and is ready to continue and further accelerate its recent growth path. We believe the envisaged IPO will allow gategroup to bring new, innovative products and services to the market and to expand in new markets. As a strategic investor and anchor shareholder, HNA will continue to support gategroup with relevant industrial and market expertise, not only based on our experience in the airline industry but also given our global footprint."

HNA, headquartered in Hainan, China, has signed deals worth more than $50 billion since 2015, including significant holdings in Hilton Worldwide Holdings Inc. and Deutsche Bank AG. However, its accumulation of debt has led to a liquidity squeeze, prompting the group to off-load some of its assets to raise funds.

Gategroup said Credit Suisse AG and UBS AG were acting as joint global coordinators. Credit Suisse, UBS and J.P.Morgan are acting as joint book runners, while Berenberg, ING, Banco Santander and UniCredit Bank AG are co-book runners.