The valuation, however, puts it on a par with its most richly valued competitors. Sluggish travelling trends could burn optimistic investors.
Fosun Tourism, the division that houses Club Med, sold some 214 million shares at HK$15.60 apiece, or about US$428 million (RM1.7 billion).
The deal for 17.5% of the company imputes a market capitalisation of US$2.4 billion. Add nearly US$700 million in net debt as of June 2018, and the enterprise value reaches US$3.1 billion.
Last year, Fosun Tourism – whose all-inclusive Club Med getaways stretch from Florida to Bali – generated adjusted Ebitda of US$135 million, after a 37% increase from 2016.
Generously assume growth at the same rate again and it would equal US$185 million for 2018 – and be worth nearly 17 times expected Ebitda.
On that basis, Club Med sits in the lap of luxury, especially considering it lost money in the first half of the year. A group of eight related tourism-based companies, including hotelier Hilton Worldwide, fetch a forward multiple closer to 11 times.
Upscale Asian competitors such as Banyan Tree and Shangri-La Hotels and Resorts , however, trade at more than 14 times expected Ebitda.
There are ways to justify some of the exuberance. Club Med has made strides repositioning itself as a more deluxe brand under Guo Guangchang’s Fosun.
And the pricey, new US$1.7 billion Atlantis resort in southern China recently opened its doors, as part of a strategy to attract mainland travellers.
So far, though, the results have been tepid. Customers from the Asia Pacific region have accounted for only about 15% of Fosun Tourism revenue in each of the last three years. The industry more broadly also has seen warmer days.
Last month, Tencent-backed travel booking firm Tongcheng-Elong slashed the size of its own initial public offering.
Shares of luggage-maker Samsonite and Ctrip, the Chinese online travel site operator, have been rattled by trade tensions and worries about a consumer slowdown.
Buying into Club Med now may not be nearly as relaxing as heading to one of its resorts.