Tongcheng-Elong Files for Hong Kong Listing

Tongcheng-Elong Holdings Ltd., a Chinese online travel service provider backed by Tencent Holdings and Ctrip.com International Ltd., filed for an initial public offering (IPO) with the Hong Kong Stock Exchange on Thursday.

Tongcheng-Elong, which mainly targets budget-conscious travelers, joins a number of Chinese tech firms eyeing a Hong Kong debut this year, including smartphone maker Xiaomi Corp. and online on-demand service provider Meituan-Dianping.

The size of the planned IPO was not disclosed. The Wall Street Journal reported in March that the company could raise between $1 billion and $1.5 billion in a potential share sale.

According to the preliminary prospectus, Tongcheng-Elong chose Morgan Stanley, JPMorgan Chase and CMB International as joint sponsors of the IPO.

Tongcheng-Elong was created by a December merger of second-tier players Tongcheng and Elong. Elong was listed on Nasdaq for more than a decade before being taken private by leading online travel agency Ctrip and social media giant Tencent. When it delisted in 2016, Elong was worth $660 million.

Tongcheng Network Technology Co., which also counted Ctrip as a major shareholder, was never publicly listed.

According to the prospectus, Tencent is the largest Tongcheng-Elong shareholder with 25% stake, followed by Ctrip with 23%.

Caixin reported in March that the new company was considering an IPO. A source close to the matter said “the company post-merger is profitable.”

According to the prospectus, Tongcheng-Elong posted a combined profit of 685 million yuan ($105.8 million) in 2017 with revenue of 5.2 billion yuan. The company had 121 million monthly active users on its platforms in 2017, according to the prospectus.

China’s booming tourism market provides a lucrative opportunity for online travel agencies. In 2017, Chinese tourists made 4.53 billion trips domestically and internationally, according to a report from the Chinese Academy of Social Sciences.

Tongcheng-Elong offers online booking services for flight tickets, accommodations and travel tours. The company said at the time of the merger that it hoped to leverage Tencent’s highly popular instant messaging platform WeChat and QQ, as well as its online-payment functions, to tap more budget-conscious travelers.

Contact reporter Han Wei (weihan@caixin.com)