Meet Virgin’s new stakeholder, Hainan Airline Group

Hainan Airline Group is a sprawling conglomerate, with links ranging from George Soros to China’s government.

Virgin’s latest investor controls or has sizeable stakes in 11 listed companies in China and Hong Kong. Picture: Chris Pavlich.

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Chinese conglomerate Hainan Airline Group is more than just an airline, with links to parties ranging from George Soros to the Chinese government. It is, in fact, one of China’s largest conglomerates, based in southern tropical province of Hainan. The company has total assets of 600 billion yuan or $126 billion, making it one of the top 100 largest companies in the country. It is also a Fortune 500 company.

Hainan Airline Group controls or has sizeable stakes in 11 listed companies in China and Hong Kong. Its business activities range from the traditional airline business to emerging biotechnology sector, and include research facilities in San Francisco.

It has one of the largest aircraft fleets in China with more than 1150 aircrafts and operates more than 700 routes. The company’s extensive aviation assets include a pilot training school in Australia, which is called Australian International Aviation College.

Since its founding in 1993, subsidiary Hainan Air has transformed itself into one of the country’s leading carriers, in a sector dominated by large state carriers such as Air China. One of the early investors in the carrier is the billionaire investor George Soros.

The group has complex and opaque structure. Taking its core asset Hainan Air as an example, the company is dual listed on Hong Kong and Shanghai. Its largest and controlling shareholder is Grand China Air, a subsidiary of Hainan Air Group. Grand China Air owns 33.07 per cent of Hainan Air, according to its 2015 annual report.

However, the largest and controlling shareholder of Grand China Air also happen to be the provincial government of Hainan. The State Assets Supervision and Administration Commission of Hainan Provincial Government owns 24.97 per cent of shares in Grand China Air, which makes the provincial government the controlling shareholder, according to its annual report.

Apart from the traditional airline business, the company is also an active and growing player in China’s financial services sector. Its tentacles reach into every facet of the country’s financial market, from aircraft leasing to insurance and investment banking. It controls more than 30 financial services companies, including a listed firm, and manages more than 500 billion yuan in assets.

According to the company’s website, Hainan Air Capital, which runs the group’s financial services arm, has offices throughout the world including branches in Singapore, Sydney, New York, London and Oslo. It is also the world’s fourth largest aircraft leaser, with more than 550 aircraft on its book.

The company is known for its aggressive expansion strategy, apart from airline and financial services business. It also has extensive interests in tourism, hotel, logistic and e-commerce and biotechnology. It owns one of the largest hotel chains in China, with more than 450 hotels under management. The group is also exposed to the country’s real estate sector, with large residential and commercial projects throughout China.