For investors and bankers wanting to know more about who’s behind Anbang Insurance Group, China’s second-largest life insurer, plans for a Hong Kong IPO next year should provide some answers.
Anbang’s relentless pursuit of overseas deals, rapid financing and opaque shareholding structure have raised questions about its deal-making prowess. In April, it aborted an eye-catching $14 billion bid for Starwood Hotels and Resorts Worldwide.
For a company boasting about $300 billion in assets, including New York’s Waldorf Astoria hotel, Anbang’s chairman Wu Xiaohui and top executives maintain a low profile. Company directors rarely appear in public or give media interviews.
That operational secrecy and limited financial disclosures has deterred some foreign banks from taking on Anbang as a client, with some bank compliance departments feeling they couldn’t satisfy strict ‘know-your-client’ tests on the group, said people with direct knowledge of the matter.
That may change as plans take shape for an insurance IPO that some bankers reckon could raise $5-$7 billion.
Under Hong Kong listing rules, Anbang will have to disclose information on its shareholding structure, subsidiaries and changes in its financial position for recent years – a process made more complicated by an acquisitions spree estimated at as much as $15 billion as it chased higher yielding assets.
Listing companies also have to detail how they plan to use the IPO funds, and are held accountable to that.
Investors will be keen to read the ‘risk factor’ section of any listing document, laying out management’s view of the business and its future strategy, bankers and analysts said.
“If you’re dealing with what’s effectively a financial conglomerate involved in all sorts of things including investing in hotels, financial disclosure could be actually quite important and require a fair amount of work from banks and accountants,” said Philippe Espinasse, a former banker at UBS and Nomura.
In response to Reuters queries for this article, Anbang said its overseas acquisitions have been examined and approved by various regulators. “Anbang has engaged in and has fully complied with all corporate governance and internal compliance procedures to work with a broad range of top-tier financial advisors,” it said.
Bankers and investors will also be keen to find out more about Anbang’s leadership and ownership.
The chairman, 49-year-old Wu, is married to a granddaughter of Chinese patriarch Deng Xiaoping, while Levin Zhu, the son of former premier Zhu Rongji and founder of China Investment Capital Corp, the country’s largest domestic investment bank, has also been an Anbang director.
Founded as an auto insurer in 2004, Anbang has grown to be China’s No. 2 life insurer, with 10 percent market share and premium income of $34 billion.
It has invited a dozen investment banks, including nine foreign banks, to make IPO pitches, people familiar with the matter said.
Confident that Hong Kong’s listing rules will force Anbang to disclose information previously kept under wraps – and lured by a potential $200 million in IPO fees – more foreign banks are also interested in joining the deal, one of the knowledgeable individuals said.
Only four foreign firms – Evercore Partners, Deutsche Bank , BNP Paribas and UBS – have advised Anbang on M&A deals, earning just over $20 million in fees, according to a Thomson Reuters review and Freeman & Co estimates, though another source said Bank of America, Credit Suisse, Goldman Sachs, Nomura Holdings and PJT Partners have also worked with Anbang.
For deal-starved investment banks, the acquisitive Anbang could prove a valuable client as IPO funds could give it the firepower for more deals, the people said.
“If somebody says they don’t want to be on this deal, they would be lying,” said one Hong Kong-based equity capital banker, whose firm was invited to pitch for the IPO, adding that compliance officers would find a reason to justify being on the deal.
“If this was a $100 million or $500 million deal, sure, you can think of many reasons why it wouldn’t make sense to be involved.”
($1 = 6.6535 Chinese yuan renminbi) (Reporting by Denny Thomas and Elzio Barreto, with additional reporting by Julie Zhu and Fiona Lau at IFR; editing by Ian Geoghegan)
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