The Real Deal New York

Waldorf Astoria owner is a Chinese enigma

Web of holding companies controls insurer

September 02, 2016 08:39AM

The Waldorf Astoria hotel and Wu Xiaohui

The Waldorf Astoria hotel and Wu Xiaohui

Who really owns the Waldorf Astoria Hotel? Turns out the answer is surprisingly hard to come by.

Chinese insurer Anbang Insurance Group bought the Manhattan property for $1.95 billion last year, and the company has since made headlines with the $6.5 billion buy of Strategic Hotels & Resorts and an ultimately withdrawn $14 billion bid for Starwood Hotels & Resorts. But Anbang’s ownership, in turn, is notoriously opaque.

According to a report by the New York Times, a group of villagers in rural Pinyang County control stakes in the company worth billions of dollars through a web of holding companies. Many, according to the Times, appear to be relatives of Anbang’s chairman Wu Xiaohui, who hails from the region and doesn’t formally own any stakes in the firm.

It is unclear whether these people hold shares on behalf of someone else, but the Times notes that it is common for wealthy Chinese to own stocks under the names of relatives, a process dubbed “white gloves.”

Anbang’s opaque ownership matters because it could complicate its U.S. real estate deals. Earlier this year, the firm withdrew a bid to buy Iowa insurer Fidelity Guaranty & Life for $1.6 billion after U.S. regulators had inquired about the relationship between certain shareholders. The $6.5 billion deal to buy Strategic Hotels & Resorts, which includes the Essex House in Manhattan, is still pending a review from the U.S. government. Even in China, regulators are keeping a watchful eye on the company. Reports out of China claimed insurance regulators wouldn’t approve a deal to buy Starwood, fearing too much of its capital was locked up overseas.

The Times report focuses on Wu Xiaohui, the politically connected husband to a granddaughter of legendary Communist Party leader Deng Xiapoing, who has been a key figure at Anbang since its founding in 2004. In 2014, the number of holding companies that own Anbang mysteriously grew from eight to 39 over a sixth month period, and its capital base grew fivefold. It isn’t immediately clear why the ownership was reshuffled or where the money came from, but the shift appears to have set off the overseas buying spree that included the Waldorf deal.

Anbang’s assets are currently worth $295 billion, according to the Times. [NYT] — Konrad Putzier