China's HNA Group to float Swiss airline caterer Gategroup

By John Revill

ZURICH (Reuters) - Chinese conglomerate HNA Group is seeking a public listing for airline caterer Gategroup, the Swiss company said on Tuesday, raising funds to help tackle HNA's liquidity crunch.

Reuters reported in November that HNA, which bought Gategroup in 2016, was considering an initial public offering (IPO).

The move is the latest in the aviation-to-financial services conglomerate's drive to restructure its operations, while raising cash by selling equity and real estate assets.

No valuation was given for the Gategroup flotation, although an issue of new shares will generate 350 million Swiss francs ($372 million) for Gategroup. HNA will raise money by selling a 65 percent stake.

Gategroup Chief Executive Xavier Rossinyol said a valuation would be announced in the next few weeks, adding he believed it would be "significantly" higher than in the past. HNA paid $1.5 billion for Gategroup.

"The company is generating double the profits it was three years ago," he told Reuters in an interview.

He said Gategroup, which serves 700 million passengers per year, was financially separate from its Chinese owner, which wanted to remain an anchor shareholder.

"From a financial point of view we have been 100 percent independent from HNA. There has been no financial movement between Gategroup and HNA, no inter-company loans or guarantees," he said.

HNA wants to list Gategroup in Zurich at the end of the first quarter or during the second quarter of 2018. Gategroup, which employs 43,000 people, was listed in Switzerland before HNA bought it.

Gategroup, which provides catering for Virgin Atlantic, Norwegian and other airlines, increased its revenue by 35 percent in 2017 to 4.55 billion francs, and doubled operating profit to 167.1 million francs.

Rossinyol said he expected growth to continue as passenger numbers increase and more people buy meals during flights. He expects revenue to increase by 5 to 7 percent during 2018, while profitability could be boosted by standardising more kitchens.

Gategroup could make acquisitions too to expand its geographical base, Rossinyol said.

HNA has been on an acquisition spree in the past two years, including buying stakes in Hilton Worldwide Holdings Inc and Deutsche Bank

But the $50 billion binge has prompted increased scrutiny from regulators and bankers due to announced changes to HNA's shareholding structure and its use of leverage.

Swiss investigators said in January they were examining the circumstances surrounding HNA's acquisition of Gategroup after watchdogs raised questions about the transaction.

The Gategroup IPO would be the fourth listing announced in Switzerland so far this year.

"The IPO pipeline is extremely strong," said JP Morgan's Swiss head Nick Bossart. "We think we could see in Switzerland a handful in the first half of the year."

Credit Suisse and UBS are joint global coordinators and joint bookrunners for the IPO along with JP Morgan. Berenberg, ING, Banco Santander and Unicredit are co-bookrunners.

($1 = 0.9399 Swiss francs)

(Reporting by John Revill; Editing by Stephen Coates and Mark Potter)