Ctrip-backed travel agent Tongcheng-eLong to raise up to US$1.5 b in Hong Kong stock sale

Tongcheng-eLong Holdings, the online travel agent cobbled together last December through a merger, is planning to raise between US$1 billion and US$1.5 billion in a Hong Kong initial public offering, according to people familiar with the plan.

The Suzhou-based company, formed through the merger of Tongcheng Network with E-dragon Holdings Limited (eLong), helps budget travellers book accommodation, flights and train tickets, serving as many as 300 million customers in 2016, according to its website.

The fundraising would trump the US$85 million stock offer in 2003 by China’s largest online tour operator Ctrip.com, and create another online tour giant, in an industry that is growing and innovating in leaps and bounds through the combination of smartphone-enabled internet technology with the world’s largest population of domestic and overseas travellers.

The gross merchandise volume (GMV) of China’s online travel market expanded by 39.8 per cent in compounded growth between 2013 (US$47 billion) and 2017 (US$181 billion), according to research company iResearch.

The merged company’s transport ticketing GMV reached 80 billion yuan (US$12.31 billion) last year, according to an initial public offering application the company filed to Hong Kong Exchanges and Clearing on Thursday. The two separate companies had a combined transport ticketing GMV of 50.5 billion yuan in 2016.

The company also generates revenue from offering travel products through Tencent-based platforms and its own mobile apps and its websites. It provides accommodation reservation by receiving commissions from suppliers.