Caixin
Oct 28, 2019 08:30 PM
FINANCE

Anbang Asset Sales Continue With Disposal of Stake in China Merchants Bank

A China Merchants Bank office in Beijing, Aug. 8, 2019. Photo: VCG
A China Merchants Bank office in Beijing, Aug. 8, 2019. Photo: VCG

The state-owned company created to take over scandal-plagued Anbang Insurance Group Co. Ltd. has continued to dispose of the latter’s assets with the sale of 14.7 billion yuan ($2.1 billion) of its stake in a major Chinese bank.

Over the past two months, Dajia Insurance Group has sold off Anbang Property & Casualty Insurance Co. Ltd.’s entire stake in Shanghai- and Hong Kong-listed China Merchants Bank Co. Ltd., according to a statement the bank released Friday. Based on the bank’s average Shanghai share price from Aug. 28 to Friday — 35.3 yuan — the Anbang subsidiary’s 1.65% stake would be worth 14.7 billion yuan. Dajia retains control of several other Anbang units.

Another Anbang subsidiary still holds a 4.99% stake in China Merchants Bank, according to the statement.

Many of Anbang’s assets have been disposed of since the country’s insurance regulator took over the acquisitive company in February 2018 as it struggled to repay its policyholders, many of whom were buyers of an unconventional insurance policy that was an investment product masquerading as life insurance. Its founder Wu Xiaohui has been sentenced to 18 years in prison for fundraising fraud and embezzlement.

A rapidly expanding company since its founding, Anbang spent billions of dollars on an overseas acquisition spree, buying trophy assets including the iconic Waldorf Astoria Hotel in New York.

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After the takeover, regulators had vowed to sell off Anbang’s unnecessary financial licenses and its overseas assets that don’t do much to augment the value of its core insurance business. In June, they set up Dajia to take over Anbang’s businesses. State-owned companies including bailout fund China Insurance Security Fund Co. Ltd., Shanghai Automotive Industry (Group) Corp. and oil giant China Petrochemical Corp. fronted the capital to establish Dajia.

The regulator planned to restructure the conglomerate by selling off stakes in some businesses before returning the company to private ownership when the two-year takeover period ends next year.

Last month, Dajia sold part of its stakes in state-owned China State Construction Engineering Corp. Ltd. and real estate developer China Vanke Co. Ltd. by swapping the equity for shares in exchange-traded funds, a method increasingly used by large shareholders to reduce their stakes in listed companies without violating restrictions. The stakes sold were worth over 11 billion yuan, according to Caixin’s calculations based on the share prices on the days of announcement.

Dajia has also reportedly agreed to sell a luxury hotel portfolio for a little more than $5.8 billion to South Korea’s Mirae Asset Management Co. Ltd.

Wu Yujian contributed to this report.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com)

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