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What's on the block in China's potential sale of the century?
[HONG KONG] Two years ago, hardly a week would go by before news would emerge that HNA Group Co, Dalian Wanda Group Co or Anbang Insurance Group Co was in talks to invest in an overseas trophy asset as the trio spearheaded the nation's seemingly insatiable appetite for global expansion.
Today, all three are hunkering down and in downsizing mode. HNA is planning about US$16 billion in asset sales during the first half of the year, Wanda is putting up its last two overseas property developments up for sale and the government last year asked Anbang - rudderless since its chairman's detention in June - to sell its overseas assets, according to people familiar with the matter.
Behind the reversal is China's clampdown on capital outflows to protect the yuan from depreciating and as the government steps up its campaign to snuff out financial risks stemming from the country's mounting pile of corporate debt.
In HNA's case, it doesn't earn enough profits to cover interest expenses, which according to Bloomberg data, have soared to levels topping those of any non-financial company in China.
Wanda declined to comment, while representatives at HNA and Anbang didn't immediately respond to queries. Below is a list of notable assets the companies still own that could possibly come up for sale.
Though it isn't clear what HNA specifically plans to sell, as of June, HNA had amassed US$190 billion of assets - more than at American Express Co. The group also held almost US$30 billion of shareholdings, according to data compiled by Bloomberg, and Real Capital Analytics estimates the conglomerate owns more than US$14 billion in real estate properties worldwide.
HNA's investments are diverse. They range from banks to airlines, hotel chains and duty free shops. Some of its notable assets include:
- Deutsche Bank AG: HNA's 9.9 per cent stake makes it the largest shareholder of Europe's largest bank. HNA hedged its investment through a so-called collar trade that limits the risk, but also potential profits.
- Hilton: HNA owns 25 per cent stakes in Hilton Worldwide Holdings Inc, Park Hotels & Resorts Inc and Hilton Grand Vacations Inc as part of a purchase from Blackstone LP that was completed in 2017. But there's a two-year lock-up to the deal preventing HNA from selling those shares until 2019.
- CIT: In 2016, HNA agreed to buy CIT Group Inc's aircraft-leasing business for US$10 billion to create the world's third-largest rental fleet.
- Real estate: HNA is building a luxury development in the land near Hong Kong's former airport that it bought for US$3.5 billion. In Manhattan, it owns buildings in 245 Park Avenue, 850 Third Avenue and 1180 Avenue of the Americas. The conglomerate was said to approach brokers earlier about the possible sale of two office buildings in London's Canary Wharf financial district.
- Others: HNA bought Ingram Micro Inc for about US$6 billion in 2016 but the company said last month it has no plans to sell it. The group also owns 21 per cent of duty-free-shop operator Dufry AG, 25 per cent of OM Asset Management Plc and 19 per cent stake in Virgin Australia Holdings Ltd.
Billionaire Wang Jianlin, who was once China's richest man, is no longer talking about building an entertainment empire that could challenge Walt Disney Co.
In the past year, he's agreed to sell his group's interests in one of the largest residential projects in London - One Nine Elms - and billions of dollars worth of theme park and hotel assets in China.
Some notable assets he still holds include:
- Beverly Hills/Chicago projects: Wang's property arm is said to be putting its last two overseas property developments - a hotel, office and apartment complex in Chicago and a development in Beverly Hills, California - up for sale.
- Entertainment: The world's largest operator of movie theaters owns AMC Entertainment Holdings Inc, Odeon & UCI Cinemas Group, Nordic Cinema Group and Hoyts Group. Wanda is also the owner of Legendary Entertainment, the Hollywood production company that specializes in making monster movies such as the latest "Godzilla" and the latest "King Kong" movies.
- Sports/Luxury: Wanda owns Fifa World Cup marketing-rights holder Infront Sports & Media AG, "Ironman"-organiser World Triathlon Corp and a minority stake in Club Atletico de Madrid. It also has control of British yacht-maker Sunseeker International Ltd.
- Property: Wanda has tens of billions of dollars worth of properties across China, including more than 200 shopping malls.
People familiar with the matter said last year that Chinese authorities asked Anbang to sell its overseas assets, but the company and the insurance regulator subsequently said that there were no such plans. More recently, the government is said to have been seeking to broker the sale of a stake in the insurer, whose Chairman Wu Xiaohui has been detained by authorities since June.
The overseas deals that vaulted Mr Wu and his company onto the global stage have slowed dramatically, with Anbang's plans to buy an American hotel chain and insurance assets among those that have fallen through. A high-profile bid for a Manhattan office tower owned by the family of US presidential adviser Jared Kushner also fizzled last year amid increased scrutiny at home and abroad.
The conglomerate has almost 2 trillion yuan (S$417 billion) in assets and owns businesses spanning life and non-life insurance, asset management, financial leasing and banking, according to its website.
Some of its notable assets include:
- Waldorf Astoria: Anbang bought the landmark New York hotel for US$1.95 billion, but it's now closed for renovations that will convert most of the property into luxury condominiums. But if Anbang wants to sell, the previous owner, Hilton, has a 100-year agreement to operate the hotel.
- Strategic Hotels & Resorts Inc: The Chicago-based company is Anbang's single biggest asset, which it acquired in a deal originally valued at about US$6.5 billion. The group boasts hotels such as San Francisco's Westin St Francis and JW Marriott Essex House in New York, the Manhattan hotel near Central Park known for the red-lettered sign on its roof.
- Others: The company also invested in Netherlands-based Vivat NV, South Korea's Tongyang Life Insurance Co, Bentall Centre in Vancouver, Fidea NV in Belgium, the 717 Fifth Avenue building in New York that serves as Anbang's US headquarters and the 70 York Street building.