By Ram Badrinathan

The Singapore government’s decision to invest US$ 225 million in Travelport for a 7% stakes seems to be completely out of the blue and has taken travel industry analysts by surprise. The Government of Singapore Investment Corp (GIC) has been a traditionally conservative portfolio management company managing more than a billion dollars owned and run by Singapore elite including the ruling family. GIC has to be careful since it is the Singapore’s version of the U.S. social security fund and it is literally investing the pension and retirement money of Singapore’s Citizens.

In my opinion, GIC’s investment has nothing to do with Travelport or the travel distributionbusiness and more to do with Blackstone, the private equity group that owns 70% of Travelport. GIC has invested in Blackstone and this deal might be driven by financial considerations rather than Travelport’s strategic choices in APAC. The investment has less to do with travel, GDS, and product development and could be focused purely on making the Travelport IPO more attractive. The investment also generates a $3 billion valuation which will assist Travelport in raising an estimated $1.78 billion through IPO – that money will help in today’s tough markets.

The private equity firms will still be in control even after the IPO, but it will be interesting to see if the dilution of power leads to more control for the professionals who run the business.

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