HNA hit by another setback as NZ blocks ANZ deal

HNA has announced acquisitions worth over US$50 billion in the past two years, but has faced increased questions about its governance since a July announcement outlining its ownership showed two shareholders were proxies for founding executives.
HNA has announced acquisitions worth over US$50 billion in the past two years, but has faced increased questions about its governance since a July announcement outlining its ownership showed two shareholders were proxies for founding executives.PHOTO: AGENCE FRANCE-PRESSE

WELLINGTON • New Zealand has blocked HNA Group's US$460 million (S$619 million) purchase of a vehicle finance firm owned by Australia and New Zealand Banking Group (ANZ) in the latest in a series of setbacks around the world for the acquisitive Chinese conglomerate.

The proposed sale of UDC, New Zealand's largest non-bank lender, was agreed with ANZ nearly a year ago, and the bank had counted on the proceeds to boost its capital.

But New Zealand's Overseas Investment Office (OIO) cited uncertainty over HNA's ownership structure for the rejection, reflecting mounting international concerns about the aviation-to-shipping group's transparency and governance.

"The OIO did not determine who the relevant overseas person was from the information provided about ownership and control interests," OIO deputy chief executive of policy Lisa Barrett said.

HNA, which has announced acquisitions worth more than US$50 billion in the past two years, has faced increased questions about its governance since a July announcement outlining its ownership showed two shareholders were proxies for founding executives.

Last month, Swiss regulators found the group had failed to disclose that company executives held controlling stakes in the conglomerate in submissions relating to HNA's US$1.5 billion takeover last year of Gategroup, the airline catering group.

OWNERSHIP CONCERNS

The OIO did not determine who the relevant overseas person was from the information provided about ownership and control interests.

MS LISA BARRETT, the OIO's deputy chief executive of policy.

HNA has also faced difficulties in the United States. Earlier this month it was sued by Ness Technologies, which accused it of failing to adequately answer questions in a US review, thereby causing a US$325 million deal between the two to fail.

Another deal announced in January, for HNA to buy a stake in Skybridge Capital from US President Donald Trump's former press secretary Anthony Scaramucci, for an undisclosed sum, is still under review by the Committee on Foreign Investment in the US.

An HNA spokesman said the New Zealand watchdog's decision was inconsistent with the views of other regulators around the world that had approved HNA and other Chinese investments.

"The current political environment in New Zealand relative to foreign investment will play a significant role in our determination of next steps," the spokesman said in a statement.

Still, it is rare for a deal to be rejected because of concerns over ownership structure, said lawyer Daniel Wong, a director with Flacks & Wong who advises companies on foreign investments and was not involved in the deal.

"For whatever reason, the information they (OIO) have received hasn't been sufficient to enable them to determine who was the actual person behind the applicant. That is quite unusual," he said.

Since January last year, the OIO has approved 201 deals and rejected just three.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 22, 2017, with the headline 'HNA hit by another setback as NZ blocks ANZ deal'. Print Edition | Subscribe