Fosun Tourism Group, which includes Club Med as well as a luxury resort in the southern Chinese seaside city of Sanya, launched its IPO on Friday in which it aims to raise between $427 million and $547 million.

The company is selling about 214 million shares at a price range of between HK$15.6 and HK$20 ($1.99-$2.56), according to a press release.

However Fosun Tourism is testing investors after they have suffered a dismal year in terms of IPO performance, with most companies that have listed in Hong Kong trading below their IPO prices, such as Xiaomi and Meituan Dianping.

Hong Kong share prices have fallen about 12 percent this year amid concern about the impact of interest rate rises and deteriorating Sino-U.S. trade relations.

Asked why the company was choosing to go public against such a backdrop, Fosun Tourism Chairman, Executive Director and Chief Executive Officer Jiannong Qian said it was part of a long-term strategy.

"After being listed we will be able to catapult our group," Qian said at a news conference on Thursday, stressing the potential growth in the Chinese tourism industry.

Indeed, the company plans to use over half the proceeds from the IPO to develop its Lijiang and Taicang resorts in China, as well as exploring new tourism destinations, according to the press release.

Another quarter of the proceeds will go towards repaying a portion of outstanding bank loans while the rest will go towards expanding its existing business.

Tourism is a key profit growth driver for its parent, Fosun International, which won control of Club Med in 2015 for 939 million euros ($1.1 billion) after what was then France's longest takeover saga lasting almost two years.

Fosun reorganised its businesses in 2016, creating Fosun Tourism Group and paving the way for the latter's listing plan.

The company secured three cornerstone investors for its IPO, Step Ahead International Limited, China Suchuang Energy Co. and Alibaba-owned shopping website Taobao China Holding Limited, who together committed to buy about $48.6 million of shares.

Fosun was co-founded by Guo Guangchang, China's self-styled version of American billionaire investor Warren Buffett.

Like other acquisitive Chinese conglomerates, Fosun has faced increased regulatory scrutiny of its debt-fuelled, big-ticket foreign deals and is now pursuing a development path more aligned with government priorities.

In April, Fosun launched its $1.74 billion Atlantis Sanya resort in Hainan, a southernmost province known as China's Hawaii and targeted by the government for tourism development.

Qian said Fosun had managed to turn Club Med, which was a loss-making company at the time of its acquisition, around.

Fosun Tourism made a loss of 295 million yuan ($42.5 million) in 2017 and 135 million yuan in the first half of this year, according to its prospectus.

Citigroup, CLSA and JP Morgan are the joint sponsors for the IPO.

(Reporting by Julia Fioretti; Editing by Stephen Coates)

By Julia Fioretti