State-Owned Developer Sets Up Joint Venture to Tap Into Anbang Assets
State-owned developer Sino-Ocean Group Holding Ltd. is forming a joint venture with Anbang Insurance Group, tapping into the latter’s real estate portfolio at a time when the government is restructuring the debt-ridden insurer.
Sino-Ocean said in a filing to the Hong Kong Stock Exchange on Thursday that both parties will each contribute 100 million yuan ($15.7 million) for a 50-50 stake in Beijing Bangbang Commercial Property Co.
Sino-Ocean aims to establish “strategic cooperation” with Anbang in five major areas: real estate development, strategic investment, real estate financing, insurance, and pensions, according to the statement.
“The forming of this joint venture is a valuable option for Sino-Ocean Group to tap into Anbang’s real-estate portfolio,” said Alan Jin, head of property research at Hong Kong-based Mizuho Securities.
The joint venture will extend Sino-Ocean’s reach to Anbang’s existing properties in a number of key Chinese cities such as Beijing, Shanghai, Shenzhen and Chengdu, and the company will also gain from providing management services to Anbang, he said in a note.
Sino-Ocean currently owns more than 130 projects across China, and as at the end of 2017 it had a land reserve of approximately 34 million square meters (366 million square feet).
The troubled Anbang Group was taken over by China’s insurance regulator in February because it had struggled to repay its customers, with a state-run rescue fund in early April injecting 60.8 billion yuan into the business to ensure Anbang’s ability to repay its debts and protect the interests of policyholders.
On Thursday, Wu Xiaohui, the 52-year-old founder and former chairman of Anbang, was sentenced to 18 years in prison for fundraising fraud and embezzlement, and had 10.5 billion yuan in assets confiscated.
Founded in 2004, Anbang started out as a car insurance company with registered capital of 500 million yuan, and now runs a conglomerate with around 2 trillion yuan in assets, and focuses on insurance, banking, investment, hotels, and property development. The conglomerate was earlier a high-profile global shopper, picking up assets that included New York City’s luxury Waldorf Astoria hotel.
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