HNA Logistics has bought an 80% stake in fuel trader Tianjin Northern Petroleum for 910 million yuan (US$137.3 million), it emerged last week.
HNA aims to use the transaction to transform itself into a supplier of aircraft and marine fuel as well as the operator of a string of gasoline stations and petrochemical bases across China, and may now also apply for its own licence to import crude oil and oil products.
HNA will also use Tianjin Northern’s existing business to supply fuel for its own airline business.
Tianjin Northern has approval from the Ministry of Commerce to trade and import crude oil, fuel oil and petroleum products.
HNA’s parent, HNA Group, has been looking for an opportunity to deepen its involvement in the petrochemical industry for several years. The group – whose interests stretch across aviation, logistics, finance, property and tourism – signed a long-term strategic agreement in 2012 with Chinese refining giant Sinopec. In 2010, it set up Grand China Tanker.
This is the latest in a string of M&A deals for HNA Logistics which, along with its parent, is on an aggressive expansion drive.
The company announced to the Shanghai Stock Exchange in late July that it would expand its holding in Yangtze River Express to 35.1% via a capital injection. This will make it the biggest shareholder in the airline carrier, alongside its fellow HNA affiliates Hainan Airlines Group, Hainan Airlines and Lucky Air.
China’s growing domestic demand for air travel is rapidly expanding aviation fuel consumption, especially around Shanghai, which is a business hub and whose Disney Resort is attracting a growing number of tourists from other parts of China.
HNA investments in Tianjin Northern and Yangtze River Express can, therefore, be seen as a complementary bet on the continued growth of China’s aviation industry and its fuel requirements.
Previously an all-cargo operator, Yangtze River Express applied to the Civil Aviation Administration of China (CAAC) in 2015 to expand its scope beyond cargo operations and win the right to operate domestic passenger services from its Shanghai hub.