China sells the remnants of the Anbang empire for $ 5.2 billion

China’s Anbang remains have been valued at more than $ 5.2 billion in the latest attempt by state controls to disband the high-flying group led by imprisoned magnate Wu Xiaohui.

Anbang, with a cohort of conglomerates included HNA and Dalian Wanda, embodied China’s “exit” policy that led to aggressive investments and expansion overseas in the mid-2010s.

Investors have been closely following Beijing’s efforts for years to dissolve Anbang after its collapse amazing waterfall as a test case for how other defunct groups, which saddle the state with billions of dollars in debt, will be handled.

Wu, a high profile entrepreneur who married the family of the late Chinese leader Deng Xiaoping, transformed Anbang, a local auto insurance company, into a global car purchase that included the purchase of the famous 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 between a series of collapses to embarrasses the Chinese government and stoke fears about hidden corporate debt and instability in the country’s financial system.

Chinese state investors controlling Anbang’s assets – renamed Dajia Insurance – They plan to sell their stake for $ 5.19 billion, according to a presentation with the Beijing Financial Assets Exchange.

An auction sale of 99 percent 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 12 d ‘August, according to the presentation.

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

The sale is available only for offers from consortia. According to people close to Chinese regulators, Beijing wants Dajia to be subject to a diversified ownership structure involving three to five private or state shareholders. This is part of a plan to reduce risks and add control and balance after problems under their former private property.

Caixin, a leading Chinese commercial publication, said the sale attracted interest from six consortia. Among those interested are ecommerce giant, state-backed Chery Automobile and online insurer ZhongAn, as well as Primavera Capital, a private equity group run by Fred Hu, who first led the China division for Goldman Sachs.

Part of broader moves to improve discipline in China’s markets and eliminate it so far implicit warranties that the state will always save companies in financial difficulties, analysts have noted that Beijing is increasingly encouraging China’s creditors and the private sector to help share the weight of state providers.

But the tortuous process to uncover the expansive Anbang has already hit several mistakes. In particular, a U.S. court at the end of last year ruled in favor of South Korea’s Mirae Asset for killing a $ 5.8 billion deal to buy 15 luxury hotels from Anbang in USA.

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