American Express said on Monday that four financial investors have committed a total of $900 million to a business travel joint venture, in what would be the largest single investment ever made in a travel management company.
The deal highlights some of the challenges facing the world's biggest credit card issuer, as tighter corporate budgets weigh on its business travel division, which helps employees of companies with their travel arrangements.
Certares LP, the investment firm founded by former JPMorgan Chase dealmaker and private equity veteran Greg O'Hara, will be joined by Qatar Investment Authority, BlackRock and Macquarie Capital in the joint venture.
Qatar Investment Authority will have a bigger stake in the joint venture than the other three investors, according to a person familiar with the matter who was not authorized to publicly disclose this detail. The deal underscores the sovereign wealth fund's new appetite for private equity-type direct investments in U.S.-based companies.
American Express said in September it was in talks to sell half of its business travel division for up to $1 billion to an investor group led by Certares. The company's consumer travel business will not be a part of the deal.
On Monday, American Express said an agreement had been reached and revealed the identity of those involved. It will own half of the joint venture, with the four financial investors owning the remainder, according to a statement by the company.
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The New York-based company said it expected to use a "substantial portion" of any gain recognized upon a closing of the transaction, expected in the second quarter, to invest in growth initiatives.
The travel business unit is the biggest of its kind, serving customers who collectively spend more than $19 billion in corporate travel. It is present in 139 countries and employs over 14,000 people.
Former American Express global commercial services president Bill Glenn will be chief executive of the joint venture, while O' Hara will serve as chairman, the companies said. O'Hara also sits on the board of directors of Travel Leaders Group, the largest U.S. travel agency company.