Chen Feng (businessman)

Chen Feng
Born	1953 (age 62–63) Huozhou, Shanxi province, China
Nationality	China
Education	M.B.A. Maastricht School of Management
Occupation	Businessman
Known for	Founder of HNA Group and Hainan Airlines
Religion	Buddhist

Chen Feng (born 1953) is a Chinese businessman and founder of the Chinese business conglomerate HNA Group and Hainan Airlines.^[1][2][3]

Early life and education

Chen Feng was born in June 1953 in Huozhou, Shanxi province^[3] and raised in Beijing, the son of middle-rank Communist Party officials.^[2] During the Cultural Revolution, Feng worked for the People's Liberation Army Air Force in the Sichuan; after the revolution was over in 1979, Feng worked for the Civil Aviation Administration of China^[2] and the National Air Regulations Bureau in China.^[1] In 1984, he won a scholarship to study at the Lufthansa College of Air Transportation Management in Germany.^[3] In 1989, he took a job at the World Bank's loan office in Haikou and in 1990,^[2] he went to work for the Aviation Business Assistant to Provincial Governor in Hainan province^[1] which had seen a surge indevelopment as a tourist destination.^[2]

Chen would get further education during his career including a M.B.A. from the Maastricht School of Management in the Netherlands in 1995 and obtained a diploma from Harvard Business School in 2002.^[3]

Career

After efforts by Hainan Province to establish a regional airline (Hainan Provincial Airlines) were not successful, Chen was tasked with bringing in private expertise and investment.^[4] Chen was able to raise 250 million yuan (US$31.25 million) in new capital, 75% from 24 institutional investors, 20% from existing corporate staff, and 5% from the Hainan government.^[4] In 1993, Chen launched the Hainan Airlines Company Limited^[4] China's first joint-stock air-transport enterprise. Due to the 1997 Asian financial crisis - which caused the collapse of several local financial and real estate companies - the airline was recapitalized by the Hainan government and restructured and its name changed to Hainan Airlines (HNA) Company, Ltd.^[4] Hainan province was particularly affected by the crisis due to it being both a tourist and retirement destination that had seen a high amount of speculative development and lending. In 1995, George Soros invested $25 million in the airline for a 14.8% stake, becoming its largest shareholder.^[1][5]

Hainan Airlines

In 2000, the Chinese national government forced the creation of three major domestic aviation companies: Air China Ltd., China Eastern Airlines Corp, and China Southern Airlines, which accelerated Chen's plans for expansion.^[4] In 2000, Chen founded a holding company, the HNA Group Company, Ltd^[3] and used it as a vehicle to purchase Xi'an-based Chang'an Airlines in August 2000 and China Xinhua Airlines and Shanxi Airlines, both in 2001.^[4] In August 2001, Hainan Airlines merged with Haikou-based Meilan International Airport in Hainan province.^[4] Despite the mergers and acquisitions, Hainan Airlines remains the 4th player in China^[4] with 15% market share in 2012.^[2] In June 2006, Chen created another holding company, Grand China Airlines Holdings, to hold the airline assets of the HNA Group - then consisting of 100 planes and 30 billion yuan (US$3.75 billion) in assets,^[4] freeing the HNA Group to expand into other business lines. At the time, Chen owned 32.75% of Grand China Airline Holdings shares.^[4] In 2012, the HNA Group had sales of US$17.5 billion and pre-tax profits of US$837 million. The group structure of the HNA Group is known to be extremely complicated.^[2]

HNA Group

Thanks to ready access to bank financing and his extensive political connections, Chen was able to go on an acquisition spree - using his holding company, the HNA Group, as the primary purchasing vehicle - and expanded its operations into logistics, retail, property, tourism, and financial services. Commenting on future growth, Chen stated in 2014: "By 2020, we can become one of the top 100 companies, and by 2030, we want to be one of the top 50...Assets are still cheap in the U.S. and Europe, and we will continue to acquire them. We need a batch of world-class companies to emerge from China to help the country’s growth, and HNA will be one of those. We want to be everywhere."^[6]

According to the HNA Group website, in 2015, the HNA Group included controlling stakes in 11 listed companies, revenues of RMB 190 billion ($25.6 billion USD), group assets of RMB 600 billion, and over 180,000 employees worldwide.^[7]

Acquisitions

• In 2006, the HNA Group acquired two airlines in Hong Kong, Hong Kong Airlines and Hong Kong Express Airways.^[2]
• In 2011, the HNA Group paid US$260 million for a foreclosure-threatened Manhattan office tower at 1180 Sixth Avenue^[8] and purchased the Cassa Hotel New York for US$126 million.^[9]
• In May 2011, the HNA Group purchased a 20% interest in the NH Hotel Group for €431.6 million (US$610.7 million)^[10] and in November 2014, HNA increased its ownership to 29.5%.^[11]
• In August 2011, the HNA Group purchased GE Seaco via its Bohai Leasing affiliate for US$1.05 billion,^[12] the world's 5th largest marine container leasing company.^[13]
• In October 2012, the HNA Group completed its acquisition of a 48 percent stake in Aigle Azur, France's second largest airline, for €52 million.^[14]
• In June 2013, the HNA Group purchased TIP Trailer Services, Europe's largest truck and trailer leasing company (with 45,000 units), from G.E. Capital.^[15]
• In January 2015, affiliate Bohai Leasing purchased the Bermuda-based container leasing group, Cronos Limited, for €2.18 billion.^[16]
• In June 2015, HNA Group bought a 15 percent stake in Red Lion Hotels Corporation from Columbia Pacific Advisors.^[17]
• In July 2015, HNA Group purchased airport luggage handler Swissport International Ltd. from PAI Partners SAS for 2.73 billion Swiss francs (USD$2.8 billion).^[17]
• In November 2015, the HNA Group announced it would invest US$450 million in low cost carrier Azul Brazilian Airlines, becoming its single largest shareholder,^[18] with a 23.7% interest.^[19]
• In November 2015, HNA Group announced it would make a 10% investment in French hotelier Pierre & Vacances.^[20]
• In January 2016, the HNA Group via its Bohai Leasing affiliate, purchased Irish aircraft leasing company Avolon. When combined with HNA's existing aircraft leasing business, the new entity with over 500 aircraft will become the world's fourth largest aircraft leasing business by asset value.^[21]
• In February 2016, the HNA Group agreed to purchase technology distributor, Ingram Micro for $6.0 billion, via its controlled affiliate, Tianjin Tianhai Investment Co Ltd.^[22]
• In April 2016, the HNA Group purchased US$38B in sales Minneapolis-based Carlson Hotels (owner of the Radisson brand) which included a majority interest in US$7 billion in sales Carlson Rezidor Hotel Group of Brussels.^[23]
• In April 2016, the HNA Group purchased Gategroup Holding AG, the 2nd largest airline-catering company in the world, for $1.5 billion.^[24]
• In May 2016, the HNA Group purchased 49.99% of Air France's catering and cleaning subsidiary, Servair, with the option to increase its stake to 80% if certain conditions are met.^[25][26] When combined with previously purchased Gategroup, HNA will own and operate the world's largest airline catering company.^[26]
• In May 2016, the HNA Group purchased a 13% interest in Virgin Australia Airlines with the option to increase its stake to 20%.^[26]
• In May 2016, the HNA Group purchased a 7% interest in private consortium Atlantic Gateway, the owner of 50% of TAP Airlines, as well as convertible shares, which if exercised, would increase its stake in Atlantic to 40% and its indirect ownership of TAP to 20%.^[27]
• In July 2016, the HNA Group purchased an 80% stake in the Zurich-based aircraft maintenance organization SR Technics from Abu Dhabi’s state investment company Mubadala.^[28]
• In October 2016, the HNA Group announced that it would purchase 25 percent of Hilton Worldwide Holdings Inc. from the Blackstone Group LP for $6.5 billion.^[29]

Personal life

Feng is a Buddhist and lives a simple life. He does not drink or smoke.^[1]

References

1. South China Morning Post: "Buddhist tycoon Chen Feng built Hainan Airlines into global empire" 12 April 2014
2. Washington Post: "For Hainan Airlines’ Chen Feng, rise of resort in China provides lift for a new sky empire" By William Mellor and Jasmine Wang May 23, 2014
3. Wharton Business School Alumni: "Chen Feng: Chairman Hainan Airlines" retrieved June 4, 2016
4. Caijing.com: "Hainan Airlines to form aviation conglomerate" By Ji Minhua and Liu Gong July 10, 2006
5. China Daily News: "Soros injects another US$25m into Hainan Airlines" By Zeng Qingkai October 17, 2005
6. Minnesota Star Tribune: "Who is HNA Group, the buyer of Carlson's hotel business?" By Kavita Kumar APRIL 28, 2016
7. HNA Group website: "Profile" retrieved July 2, 2016
8. New York Times: "Chinese Investors Pursue U.S. Property Deals" By JULIE CRESWELL June 25, 2013
9. Wall Street Journal: "Massey Knakal Plays Role Refinancing Midtown Hotel" by Craig Karmin March 2, 2014
10. Hotel News Now: "HNA Group acquires 20% stake in NH Hoteles" 17 May 2011
11. Reuters: "China's HNA buys 8.33 pct of Spain's NH Hoteles from Italy's Intesa" November 11, 2014
12. Bloomberg: "GE Agrees to $1.05 Billion Sale of SeaCo to HNA, Bravia" by Zachary R. Mider, Rachel Layne and Natalie Doss August 1, 2011
13. Seaco Global website: "HNA Group and Bravia Capital to Acquire GE SeaCo" January 08, 2011
14. Wall Street Journal: "China's HNA Group to Buy Stake in France's Aigle Azur" by DINNY MCMAHON October 22, 2012
15. Automotive Fleet News: "China-based HNA Group Inks Deal to Purchase TIP Trailer Services from GE Capital" July 10, 2013
16. Seac Global: "Bohai Leasing Company purchases Cronos Limited" January 26, 2015
17. Bloomberg: "After $17 Billion Deal Spree, Chen Juggernaut Loses in London" February 26, 2016
18. "HNA Group and Azul Brazilian Airlines Forge Longterm Strategic Partnership". HNA. November 24, 2015. Retrieved November 25, 2015.
19. Air Transport World: "China’s HNA Group eyes further investments" by Victoria Moores June 22, 2016
20. LePoint: "Après Fram, le chinois HNA s'intéresse à Pierre & Vacances - Le conglomérat HNA, ancien candidat à la reprise de Fram, pourrait prendre une participation de 10 % dans le groupe français spécialisé dans le tourisme" 09/11/2015
21. "Avolon News".
22. New York Times: "Ingram Micro Sold to Chinese Company for $6 Billion" By Amie Tsang February 18, 2016
23. Wall Street Journal: "China’s HNA to Buy Carlson Rezidor Hotel Group - HNA to also acquire Carlson’s stake in Stockholm-listed Rezidor Hotel Group" By WAYNE MA, KANE WU, and JOSH BECKERMAN April 28, 2016
24. Bloomberg: "China's HNA to Buy Airline Caterer Gategroup for $1.5 Billion" April 11, 2016
25. Financial Times: "HNA set to swoop on Air France’s Servair" May 30, 2016
26. Financial Times: "China’s HNA group snaps up stake in Virgin Australia" by Adam Thomson and Jamie Smyth May 31, 2016
27. Dinheiro: "Chineses da HNA podem ficar indiretamente com 20% da TAP" by Steven Governo 21 Maio 2016
28. Air Transport World: "China’s HNA Group acquires majority stake in SR Technics" by Alan Dron July 20, 2016
29. Bloomberg: "China’s HNA to Buy $6.5 Billion Hilton Stake From Blackstone" by Hui-Yong Yu and Neil Callanan October 24, 2016