Tencent-backed online travel agency Tongcheng-eLong plans to use Hong Kong IPO to build brand awareness
- Suzhou City-based company’s stock ends first trading day at HK12.40, above IPO price of HK$9.80
- Company banking on WeChat penetration, booming online travel market and government investment in high-speed railway network to develop business
Tencent-backed Tongcheng-eLong Holdings, China’s third-largest online travel agency, will use its trading debut on the Hong Kong stock exchange to gain brand awareness at home and abroad.
“The biggest purpose for us to list is to increase our brand awareness, as we are in the consumer industry,” Jiazhu Wu, the company’s chief strategy officer, said in an interview. “When you are a Chinese company, getting listed gives you extra credit among consumers and partners – this the most important purpose. We want our governance to be more regulated, and to attract more attention from international investors.”
Ctrip-backed travel agent Tongcheng-eLong to raise up to US$1.5 b in Hong Kong stock sale
The company, which has a 10 per cent market share, debuted at HK$10.78 a share on Monday, at a margin over its initial public offering price of HK$9.80, which was at the lower limit of its price range. The stock rose through the day to end at HK12.40.
But with more than 4 billion yuan (US$576.3 million) in cash assets, Wu said, “raising money was honestly not our first purpose.”
Wu, and the company’s chief financial officer, Julian Fan, were also quick to dismiss speculation that Tongcheng-eLong had initially hoped to raise between US$800 million and US$1 billion from the IPO, but had to lower their target to US$160 million in a weak market.
“We never announced how much we wanted to raise, we just followed the market and listened to the advice of investment bankers,” said Wu.
Chinese internet giant Tencent is the company’s largest shareholder, with a 25 per cent stake. Chinese travel website Ctrip.com International is its second-largest shareholder and owns 23 per cent of Tongcheng-eLong.
