The Real Deal New York

Three of NYC’s most active investors are in the crosshairs of Chinese regulators

China Banking Regulatory Commission is looking to get a handle on runaway debt
June 22, 2017 01:40PM

From left: HNA Group’s Chen Feng and Fosun’s Guo Guangchang and Anbang’s Wu Xiaohui

Anbang Insurance Group, HNA Group and Fosun International are among five international dealmakers that China’s banking regulator is investigating as it attempts to control debt levels.

The China Banking Regulatory commission is looking into the firms in order to “examine those companies’ leverage situations and risks,” a source told the Wall Street Journal.

Dalian Wanda Group TRData LogoTINY and Rossoneri Sports Investment Management Changxing Ltd. are the other firms regulators are scrutinizing. Not counting Rossoneri (the new owner of Italian soccer club AC Milan), the firms have made $57 billion worth of overseas investments since the beginning of 2015, or 15 percent of Chinese company totals, according to data from Dealogic.

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“They’re all guys that have engaged in high-profile marquee international acquisitions,” said Forsyth Barr Asia’s Bill Bowler, an equity-sales trader based in Hong Kong.

The investigation began on June 6, when officials got together for what was described as “urgent” conference calls. Shares of Fosun, Dalian Wanda and HNA Group tumbled Thursday following the news.

HNA made headlines here in New York in March when it went into contract to buy 245 Park Avenue for $2.21 billion. It also owns 25 percent of Hilton Hotels.

Anbang chairman Wu Xiaohui earlier this month turned over his duties for “personal reasons” amid new claims that he had been detained by Chinese authorities. Chinese banks were subsequently told to stop doing business with the company, which owns the Waldorf Astoria.

In late 2015, Fosun’s CEO Guo Guangchang, dubbed the Warren Buffett of China, was reportedly detained by Chinese authorities. He re-emerged about a week later.

The recent investigation into the big dealmakers comes as Beijing rolls out new capital controls to stabilize the country’s weakening currency and promote domestic investment. [WSJ]Rich Bockmann