FOSUN International is looking to raise up to US$548 million with the initial public offering (IPO) of its Club Med holiday business in Hong Kong, as it seeks funds to grow its business in China betting on a rise in tourism from the world’s second-largest economy.

Fosun Tourism Group, which includes Club Med as well as a luxury resort in the southern Chinese seaside city of Sanya in Hainan Province, launched its IPO on Friday in which it aims to raise between US$427 million and US$548 million, valuing the business at up to US$3.13 billion.

The company is selling about 214 million shares at a price range of between HK$15.6 and HK$20 (US$1.99-US$2.56), according to a press release.

However, Fosun Tourism is testing investors after they have suffered a dismal year in terms of IPO performance, with most companies that have listed in Hong Kong trading below their IPO prices, such as Xiaomi and Meituan Dianping.

Hong Kong share prices have fallen about 12 percent this year amid concern about the impact of interest rate rises and deteriorating Sino-U.S. trade relations.

Asked why the company was choosing to go public against such a backdrop, Fosun Tourism chairman, executive director and chief executive officer Qian Jiannong said it was part of a long-term strategy.

“After being listed, we will be able to catapult our group,” Qian said, stressing the potential growth in the Chinese tourism industry.

Indeed, the company plans to use over half the proceeds from the IPO to develop its Lijiang and Taicang resorts in China, as well as exploring new tourism destinations, according to the press release.

Another quarter of the proceeds will go toward repaying a portion of outstanding bank loans while the rest will go toward expanding its existing business.

Fosun Tourism could raise up to US$630 million if a greenshoe, or over-allotment option, is exercised within a month of the start of trading. ( SD-Agencies)