HNA puts $40bn global buying spree into reverse
Chinese group to seek Swiss listing for Gategroup after being rapped over disclosures
HNA Group has signalled that it is kicking into reverse its $40bn global buying spree, as the Chinese conglomerate finds itself under the microscope by mainland regulators.
Adam Tan, HNA chief executive, said HNA would exit investments in industries that had been banned by the government, including real estate.
It was the first public acknowledgment by the company — which has for months been under scrutiny in China over an aggressive spending spree — that it was considering divesting any of the assets it has acquired in recent years.
“I will do my best to exit investments that were allowed in the past but are no longer allowed,” Mr Tan said in Beijing late on Tuesday at a forum hosted by Caixin Magazine, according to a transcript provided by the magazine. A Financial Times reporter was barred from attending the session with Mr Tan.
There have been other indications in recent days that HNA was looking to exit some investments.
Switzerland’s Gategroup, which HNA bought last year for SFr1.4bn ($1.4bn), said on Tuesday that it was exploring a public offering. Earlier this month, HNA agreed a sale and repurchase deal for a hotel group in Spain to improve liquidity.
HNA is among a group of companies including Dalian Wanda, Anbang Insurance, and Fosun International facing scrutiny in China after a flood of aggressive overseas investment, as Beijing looks to stem capital flight from the country.
The companies have cut back sharply on dealmaking, and Wanda already has sold nearly $10bn of property assets in China.
Analysts have flagged concerns about HNA’s continued access to affordable debt funding, given a broad crackdown in China on riskier lending. They pointed out that HNA recently paid a nearly 9 per cent yield to sell a 363-day bond — a high interest cost for such short-term debt.
The announcement that Gategroup is evaluating a potential return to public markets comes just days after the Switzerland’s takeover watchdog censured its Chinese owner HNA for providing “untrue or incomplete” information when it acquired the air-services company in 2016.
Gategroup added it could give no details on the proportion of shares that would be listed on the Swiss exchange, SIX, nor on the timing of the listing.
The Swiss Takeover Board, citing several Financial Times articles, late last week said the original information the company provided in May 2016 when acquiring Gategroup had been “untrue or incomplete”.
Asked whether the Swiss takeover panel’s ruling would be a problem for a new listing, a SIX spokesman declined to comment.
Hainan-based HNA, whose roots lie in running a domestic Chinese airline, took the Swiss aircraft-catering company private as part of its push into global aviation and logistics. The deal came amid a $40bn sprawling overseas acquisition binge over the past three years, which has seen HNA emerge as the single biggest shareholder in Deutsche Bank and Hilton Worldwide.
But questions about HNA’s true ownership continue to plague its prospects, and its aggressive financing techniques have also drawn investor concerns.
Gategroup is one of the two Swiss aviation services assets owned by HNA — it acquired Swissport at the start of 2016. Swissport recently started providing short-term loans to companies linked to the HNA Group, raising concerns among investors about the intermingling of the Swiss airline services company’s funds with its Chinese parent.