China's Anbang Insurance Plans First International Bond Issue
November 24 2016 - 6:10AM
Dow Jones News
China's Anbang Insurance Group Co. is pursuing its first
international bond offering as the acquisitive Chinese insurer
raises money to fund its ambitions to grow abroad and at home,
according to people familiar with the situation.
Anbang has held discussions with Credit Suisse Group AG and
Goldman Sachs Group Inc. in recent months on plans for the offshore
bond offering, the people said. The bond may offer rating firms and
investors a peek into the finances and ownership of Anbang's
unlisted parent company. It is unclear how much the company is
seeking to raise through the offering, but the company plans to use
the proceeds to invest in its insurance business in China and
abroad, the people said.
Chinese companies have been on a record-breaking buying binge
this year, having announced deals worth $213 billion overseas—more
than doubling the $103 billion for full-year 2015, according to
Dealogic. Anbang has emerged from relative obscurity in the past
two years to take a spot at the forefront of China's global deal
making by cutting big property and insurance deals abroad.
Earlier this year, Anbang bought the bulk of the assets that
made up Strategic Hotels & Resorts Inc. for around $5.5 billion
from Blackstone Group LP and acquired New York's marquee Waldorf
Astoria for a record-breaking $1.95 billion in 2014. It is in
discussions to buy a roughly $2.3 billion portfolio of Japanese
properties from Blackstone.
Anbang and its chairman, Wu Xiaohui, have been as enigmatic as
they have been aggressive. The Chinese insurer made an audacious
$14 billion bid for Starwood Hotels & Resorts Worldwide Inc. in
an attempt to break up Starwood's earlier deal to sell itself to
Marriott International Inc. After raising its bid to compete with a
revised Marriott offer, Anbang unexpectedly withdrew the offer.
The discussions for the bond offering are in the early stages,
and no timetable has been set, the people cautioned. Credit Suisse
and Goldman are advising Anbang on getting a credit rating, but
Anbang hasn't given a formal mandate to the banks for a bond
issuance.
Raising money from a diverse group of international investors
requires more disclosure from the company. They typically expect
credit ratings on new bond issuances from rating firms such as
Standard & Poor's and Moody's Investors Service.
Anbang's potential disclosure of more information may address
lingering questions about the group's ultimate ownership. Recent
public filings show Anbang has a mix of corporate shareholders in
sectors including cars and real estate, many themselves owned by
multiple layers of holding companies registered all around China.
Anbang has said previously that it is owned by more than 30
corporate investors that don't participate in the daily operation
of the company.
Anbang's early investors included Shanghai Automotive Industry
Corp., now SAIC Motor Corp., China's biggest auto maker, and
state-owned energy giant China Petroleum & Chemical Corp., also
known as Sinopec. Chen Xiaolu, the youngest son of revolutionary
Communist Gen. Chen Yi, is a director, online Chinese corporate
registry records show.
The new bond offering and a contemplated initial public offering
in Hong Kong of Anbang's life-insurance unit next year are among
the steps the Chinese insurer is considering that could raise more
funds. Anbang has relied on Chinese bank loans and its insurance
operations to provide the bulk of funding for its ambitions so
far.
Insurance-industry analysts in China have warned that Anbang's
aggressive acquisitions could be straining its books. Standard
& Poor's said in November 2015 that it suspended its ratings on
Vivat, the Dutch insurer Anbang bought last year, because it was
"unable to secure sufficient information to accurately assess"
Anbang's creditworthiness.
A spokesman for Anbang said S&P would rate Vivat after it
rates its parent company, Anbang's life-insurance arm. Vivat has
received positive ratings from other firms, Anbang said.
Several Wall Street banks haven't gotten internal clearance to
pursue work with Anbang in the past, partly because it is unclear
who effectively owns the company, people familiar with the matter
said. None of those people said the banks had ruled out working
with Anbang in the future, and many banks have pitched to work on
next year's initial public offering of Anbang's life-insurance
unit.
Anbang's life-insurance unit issued a 15 billion yuan ($2.2
billion) 10-year bond in December to domestic investors in
China.
Write to Kane Wu at Kane.Wu@wsj.com and Julie Steinberg at
julie.steinberg@wsj.com
(END) Dow Jones Newswires
November 24, 2016 05:55 ET (10:55 GMT)
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