China markets the remains of Anbang empire for $5.2bn

The remains of China’s Anbang have been valued at more than $5.2bn in the latest attempt by state controllers to dissolve the once high-flying group led by jailed tycoon Wu Xiaohui.

Anbang, together with a cohort of conglomerates including HNA and Dalian Wanda, embodied China’s “going out” policy which led to aggressive overseas investment and expansion in the mid-2010s.

Investors are closely following Beijing’s years-long efforts to dissolve Anbang after its stunning downfall as a test case for how other defunct groups, which saddled the state with billions of dollars in debt, will be managed.

Wu, a high-profile businessman who married into the family of late Chinese leader Deng Xiaoping, transformed Anbang, a local car insurance business, via a global acquisition drive that included buying the famed Waldorf Astoria hotel in New York City for just shy of $2bn.

The demise of the debt-laden group culminated in 2018 when Wu was jailed for 18 years on charges of fraud and embezzlement. It was among a series of collapses to embarrass the Chinese government and stoke fears over hidden corporate debt and instability in the country’s financial system. 

The Chinese state investors controlling Anbang’s assets — renamed Dajia Insurance — are planning to sell their stakes for $5.19bn, according to a filing with the Beijing Financial Assets Exchange.

An auction of almost 99 per cent of the shares in Dajia by the China Insurance Security Fund, an insurance sector rescue fund under the Ministry of Finance, and China Petrochemical Corp, will close on August 12, the filing said.

When Anbang was brought under state control in 2018, the group had Rmb2tn ($320bn) in assets. However, Dajia’s total assets have been appraised at Rmb34.6bn ($5.34bn) with liabilities of Rmb584.6m ($90m), according to the filing. Dajia reported Rmb2.9bn ($448m) in net profit for 2020. 

The sale is only available to bids from consortiums. According to people close to Chinese regulators, Beijing wants Dajia run under a diversified ownership structure involving three to five private or state-owned shareholders. This is part of a plan to reduce risks and add checks and balances after the troubles under its former private ownership.

Caixin, a leading Chinese business publication, reported that the sale has attracted interest from as many as six consortiums. Among those interested are ecommerce giant, state-backed carmaker Chery Automobile and online insurer ZhongAn, as well as Primavera Capital, a private equity group run by Fred Hu, who previously led the China division for Goldman Sachs.

As part of broader moves to improve discipline in China’s markets and eliminate hitherto implicit guarantees that the state will always bail out companies under financial distress, analysts have noted Beijing is increasingly encouraging creditors and China’s private sector to help share the burden of state lenders.

But the tortuous process to unwind the expansive Anbang has already hit several snags. Most notably, a US court late last year ruled in favour of South Korea’s Mirae Asset for killing a $5.8bn deal to purchase 15 luxury hotels from Anbang in the US.

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