Will Anything Change at American Express GBT With New Investor Money?

Mega travel management company American Express Global Business Travel is getting even bigger, ramping up for years of growth as a private company.

The company announced Tuesday it had signed an equity recapitalization agreement, which will allow it to double down on its strategy of adding tech features, and snapping up small and mid-sized travel companies in new markets. New investors means new money coming in, and the company is free to stay private as it consolidates across the globe.

“We have plenty of capacity for [mergers and acquisitions]. Expect us to continue to make strategic acquisitions and continue to invest in advanced technology to meet our clients’ evolving needs,” said Greg O’Hara, the founder and senior managing director of investment management company Certares, the lead investor in the agreement.

A group headed by Certares claimed a 50 percent stake in the company while American Express retained a 50 percent controlling stake. The Certares-led group, which includes the Qatar Investment Authority, funds managed by BlackRock, and the Teacher Retirement System of Texas, will now also include Carlyle Global Partners as a long-term private investor.

Other new long-term investors are the University of California Office of the Chief Investment Officer of the Regents, Kaiser Permanente, and GIC, a sovereign wealth fund based in Singapore.

With some investors cashing out, and new ones coming in, the company will get an influx of fresh ideas, in particular about how to advance its technology offerings. The company has put large amounts of money into tech development and acquisitions over the years.

“I think tech is really at the heart of this agreement,” said Mark Williams, chief financial officer of travel consulting firm Dots & Lines. “I think it’s 95 percent, if not 100 percent, of the goal.”

This recapitalization comes three months after a major leadership change within the company. In September, the travel agency appointed Paul Abbott, former chief commercial officer of American Express, as CEO, in part to help promote tech growth. He replaced Doug Anderson, who had led the travel management company since 2016.

At American Express, Abbott oversaw the development of the company’s new business-to-business payment system, introducing new online and mobile products.

“Doug Anderson did a great job and competed the mandate he was hired for,” O’Hara told Skift in an email. “Paul Abbott is a great executive too and is well suited for the next stage of the companies growth.”

Five Years Of Growth

American Express GBT did not disclose the terms of the deal, but the recapitalization now values the business at about $5 billion, a person familiar with the company told Skift. The deal allows the business travel company to stay private, something which has been a priority for American Express.

“This investment validates the success of the joint venture and underscores the strength of our long-term growth strategy,” said Greg O’Hara, the founder and senior managing director of Certares in a press release. “We are pleased to continue working with American Express and nearly all of our original investors, as well as welcoming Carlyle, GIC, and others to the group.”

In an email to Skift, O’Hara added that a deal of this size would require regulatory approvals, and that the company would be filing them in 2020.

American Express GBT used to be entirely owned by American Express, but was spun off as a joint venture in 2014. At the time, the travel agency received a $900 million investment from a Certares-led group.

Since then, the travel agency has become the largest travel management company in the world by transaction volume.

For context, the company managed about $19 billion of corporate travel when it was spun off in 2014, and now manages more than $35 billion.

American Express GBT has also expanded its global reach over the past five years, and now operates in over 140 countries. In large part, this growth has been through acquisitions of mid-size travel companies. In August, for example, the company claimed a majority stake in Kanoo Travel, a corporate travel agency based in the Middle East. In June, the company bought Frankfurt-based DER Business Travel.