Few companies sum up China’s offshore acquisition frenzy more than Anbang Insurance Group, the country’s largest unlisted insurer.
The company’s failed attempt to buy the Starwood hotel group was one of the most discussed deals of 2016, fuelling questions about the ability of Chinese buyers to close mega takeovers. That deal, as well as its $6.5 billion acquisition of Strategic Hotels and Resorts, made the company a poster-child for a Chinese offshore acquisition binge that broke all records.
In this context, Anbang executives could be forgiven for feeling a little hard done by when China’s government clamped down on offshore acquisitions last year. The country’s central bank joined forces with its top regulators to condemn “irrational investments” by Chinese companies overseas. Even worse, hotels and real estate were two sectors that earned a specific mention in the government’s thundering statement.
This all makes Anbang’s latest acquisition — the €350 million ($394 million) purchase of an Amsterdam hotel — an intriguing case study for acquisitive executives in the country. The company has agreed to buy the DoubleTree by Hilton Amsterdam Central Station from Blackstone, just the latest in a strong of deals the company has worked on with the US private equity firm.
The deal certainly fits the desire of Anbang chairman Wu Xiaohui to expand its European portfolio, but it also appears to cross a lot of the red lines that Chinese regulators have set.
If the company manages to get all the necessary approvals for the acquisition, it will be a strong sign to Chinese companies that the government will not be as tough on acquisitions as previously feared. That, in turn, could help these companies negotiate deals in the first place.
“People are less willing to deal with a Chinese corporate if they know there is a risk of the deal getting collapsed and they get nothing,” said Keith Pogson, EY’s senior partner of Asia Pacific financial services.
Anbang did not appear to have that problem with Blackstone. Including the latest deal, Anbang has bought more than $11 billion worth of overseas properties from the private equity house in less than three years, including its landmark acquisition of New York’s Waldorf Astoria.
The deal will also be a welcome bit of good news for a company that has faced plenty of hurdles this year. Anbang backed out of a $1.6 billion deal to purchase Fidelity & Guaranty Life after New York regulators pressed Anbang for details on its ownership and funding structure. Another mooted deal, with Donald Trump’s son-in-law Jared Kushner, also fell apart.
The company has been forced to deal with reports of even bigger issues at home. Anbang dismissed rumours last month that Wu had been detained by the government. On Friday, the Financial Times reported that its Wu had been barred from leaving the country, a claim that Anbang has denied.
Anbang confirmed the deal to FinanceAsia, saying it "fits into the company's European investment strategy and meets the investment return target, and also the requirement of risk profile". The company did not comment on regulatory hurdles facing Chinese buyers overseas.
