(Yicai Global) Feb. 27 -- China's largest travel agency Ctrip has signed up as a cornerstone investor for the Hong Kong listing of New Century Hotel Management, the country's third-biggest hotel operator.

Ctrip.com International's Hong Kong unit will subscribe to HKD251 million (USD32 million), or a little over one-fifth, of the Hangzhou-based company's shares, according to the listing prospectus. New Century aims to raise HKD1.1 billion (USD140.1 Million) through the initial public listing, which is set for March 11.

The price per share is between HKD13.37 (USD1.7) and HKD20.05, with an initial issuance of 70 million shares and an over-allotment option of up to 10.5 million, or 15 percent of the initial offering.

New Century will invest 25 percent of the funds raised, or HKD272 million, in its high-end business and resort hotels, while 35 percent will be injected into mid-range hotels. It will spend 10 percent on brand building and promotion, as well as marketing, industry event sponsorship and advertising.

Another 5 percent of the funds will be used for recruitment and staff training to support business expansion, while 15 percent will be directed to information technology system and operational upgrades. It will use 10 percent for general corporate purposes and operations.

"New Century Hotel Management needs to leap from a regionally renowned brand to a nationally famous one," Zhao Huanyan, chief knowledge specialist at Huamei Consulting, told Yicai Global. "Although it has a certain advantage in terms of its size in the local market, competition in the mid-to-high-end market is fierce and there isn't much room for growth, it also faces competition from international brands in Zhejiang province."

The IPO's other cornerstone investor is hotel franchiser GreenTree Hospitality Group, which will subscribe to USD30 million of shares with a lock-up period of six months.

Founded in 2008, New Century operated 150 hotels with a total of 34,200 guest rooms as of last December. It directly runs 31 of them and manages the remaining 119 hotels as light assets through leases, as well as franchise and other management agreements.

The firm's gross margin from its hotel operations was 23.4 percent in 2017, while that of the hotel management business was as high as 90 percent, according to the prospectus.

Editor: William Clegg