Anbang Units Step Up Asset Transfers for Restructuring

Embattled financial conglomerate Anbang Insurance Group stepped up asset transfers among subsidiaries, signaling a potential restructuring after the Chinese government took control of the company.

Several companies held by Anbang or its subsidiaries reported stake transfers late Monday, according to the companies’ exchange filings. The companies received notice of the equity moves from the China Banking and Insurance Regulatory Commission (CBIRC) without explanation on the price or the reason, several sources close to the matter told Caixin.

The transfers are designed to reorganize Anbang’s complex asset structure for future divestiture, according to a person close to Anbang. Regulators plan for Anbang to retain only the life and property insurance business, according to the source. A financial analyst said Anbang’s asset divestitures will be difficult given the size of the assets and the potential impact on the market.

Anbang, once among China’s most aggressive private dealmakers, was targeted by regulators because of debt-driven investments fueled by the sale of risky financial products to retail investors. The company, previously controlled by high-flying tycoon Wu Xiaohui, was taken over by the state for a year in February after Wu was placed under investigation for fundraising fraud and embezzlement. He was sentenced in May but is appealing.

In the round of equity transfers reported this week, property developer China Vanke Co., pharmaceutical firm Tong Ren Tang and commodity trader Changchun Eurasia Group disclosed in separate filings that their shareholder Hexie Health Insurance, a unit of Anbang, transferred its holdings in them to Anbang Life Insurance Co. last Friday.

China Merchants Bank also said Monday that Anbang’s property insurance unit transferred part of its holding in the bank to Hexie Health.

In June, the CBIRC approved revisions to Anbang’s charter of incorporation under which the state-run China Insurance Security Fund (CISF) will hold 60.8 billion shares of the company, or 98% of the total of ordinary shares. The CISF in April injected 60.8 billion yuan ($9.36 billion) into Anbang to help the company repay its debts, stabilize its operations and protect the interests of policyholders.

The remaining shares of Anbang are held by state-owned automaker SAIC Motor Corp. and Sinopec, China’s top oil refiner.

Shenzhen-listed Vanke said Monday that Hexie Health signed an agreement to transfer its 1.01% stake in Vanke to Anbang Life. The transfer won’t affect the total holdings of Anbang in Vanke. Several Anbang subsidiaries, including Hexie Health and Anbang Life, own a total of 6.7% of Vanke, according to the developer.

Similarly, Changchun Eurasia and Tong Ren Tang disclosed stake sales by Hexie Health to Anbang Life on the same day. Anbang affiliates hold 15% of both Changchun Eurasia and Tong Ren Tang.

Caixin learned from sources that Hexie also sold its stake in Minsheng Bank, China’s largest privately owned bank, to Anbang Life last Friday. Anbang-affiliated companies controlled 17.8% of Minsheng at the end of 2017, including 1.14% owned by Hexie Life, according to Minsheng’s financial report.

In addition to the companies that recently disclosed stake transfers, Anbang also holds shares in companies including Shenzhen-listed Financial Street Holdings Co. and wind turbine manufacturer Goldwind. It is unclear whether those companies’ shareholding structure has changed.

Wu, the founder and former chairman of Anbang, was sentenced to 18 years in prison in May for fundraising fraud and embezzlement. Prosecutors accused Wu of raising more than 723 billion yuan from illicit insurance sales by Anbang’s property insurance subsidiary. Wu has rejected his convictions and appealed.

Anbang exploded from an auto insurer with registered capital of 500 million yuan in 2004 to a conglomerate with 2 trillion yuan in assets, including New York City’s iconic Waldorf Astoria hotel. But the company’s opaque ownership structure and aggressive acquisitions at home and abroad that mainly involved complex transactions and highly leveraged funding raised concerns among regulators. Since May, Anbang has stepped up asset sales.

Tian Tiejun contributed to this story.

Contact reporter Han Wei (weihan@caixin.com)