The capital flight thing may just be my fevered imagination but this sure seems like a good way to move big wealth out of the country.
A twofer from Reuters. First up, BreakingViews:
Anbang’s U.S. hotel block bookings getting pricey
Anbang Insurance is in what may be an expensive hurry. The Chinese insurer is leading a consortium that has made a $13 billion cash offer for Starwood Hotels & Resorts Worldwide – potentially breaking up a sale to Marriott International. That follows another big U.S. hotel industry acquisition at the weekend and the purchase of New York’s Waldorf Astoria in 2014. It’s hard to see how they can all meet Anbang Chairman Wu Xiaohui’s financial criteria.And from the wire:
Monday’s news of Anbang’s offer came just two weeks before Starwood and Marriott shareholders are due to vote on the cash-and-shares deal they struck in November. Anbang has also agreed to buy real-estate heavy Strategic Hotels & Resorts for $6.5 billion, Reuters reported – three months after Blackstone took the company private for around $6 billion.
Wu told a Harvard recruitment fair last year that he targets investment opportunities priced at less than book value and offering a return on equity above 10 percent. The first criterion is nebulous. At $76 per share in cash, Wu is offering about 10 times book equity for Starwood. He is also exceeding the value booked by Blackstone for Strategic Hotels. But that doesn’t indicate whether the prices are sensible or not.
The return part is easier to pin down, at least for Starwood. At Anbang’s offered price for the Sheraton, Westin and W hotel manager’s shares, estimates through 2018 compiled by Thomson Reuters don’t even reach a 5 percent earnings yield. Even on a generous pre-tax measure of EBITDA relative to the full $14 billion value of the offer, including debt, the return would fall short of 9 percent in 2018....MORE
China's Anbang: from auto insurance roots to global buyer of luxury hotels
China's Anbang Insurance Group Co has emerged from near obscurity 18 months ago to sign deals worth more than $30 billion, moving into the big league of global real estate and finance.
The Beijing-based firm has offered $12.8 billion for U.S. hotel operator Starwood (HOT.N) and also agreed this month to pay Blackstone Group (BX.N) $6.5 billion for Strategic Hotels & Resorts Inc, whose 16 luxury properties include the Four Seasons Washington D.C.
Established in 2004 as an automotive and property insurer by chairman Wu Xiaohui, a native of China's entrepreneurial coastal city Wenzhou, Anbang is looking to use its 1.65 trillion yuan ($253 billion) in assets to transform into a worldwide investor.
"Anbang will have a global footprint. In 10 years, Anbang will have companies on all the world's continents," Wu, who is 49 and married to Deng Zhuorui, a granddaughter of Chinese patriarch Deng Xiaoping, told students at Harvard University last year.
Business associates describe Wu as passionate, impatient and very ambitious. He often travels by private jet accompanied by a retinue of assistants.
His acquisition strategy is underpinned by an aggressive pursuit of yield-producing companies, those business associates say, funded by cash from selling insurance products and other sources.
In October 2014, Anbang agreed to pay $1.95 billion for the Waldorf Astoria Hotel in New York, a move Wu said brought the insurer "extra brand recognition" and business opportunities....MORE