Anbang bulks up with $6.5b Blackstone deal

Anbang bulks up with $6.5b Blackstone hotel deal

The Chinese insurer is set to acquire Strategic Hotels & Resorts from the US private equity firm, according to a source.
Luxury resort Fairmont Scottsdale Princess bought by Strategic Hotels & Resorts in 2006.
Luxury resort Fairmont Scottsdale Princess bought by Strategic Hotels & Resorts in 2006.

Anbang Insurance Group is set to acquire Strategic Hotels & Resorts from Blackstone for $6.5 billion, according to a person familiar with the matter on Monday, the latest deal in a global acquisition binge by the Chinese insurer.

Blackstone’s fund Blackstone Real Estate Partners VIII completed the acquisition of Strategic Hotels & Resorts in December for $6 billion.

Strategic Hotels & Resorts is a real estate investment trust (Reit) which owns and manages luxury hotels and resorts in the United States. It owns 17 properties with an aggregate of 7,921 rooms and 847,000 square feet of multi-purpose meeting and banqueting space.

Privately held Anbang has embarked on an aggressive global growth strategy via organic growth and M&A as it seeks to diversify risk geographically.

Beijing-based Anbang has acquired other assets in the US including Fidelity & Guaranty Life for $1.6 billion in cash in November last year.

It bought the Waldorf Astoria Hotel on Manhattan’s Park Avenue for $1.95 billion, also from New York-headquartered Blackstone.

Elsewhere it agreed to buy a controlling stake in Tong Yang Life Insurance for W1.13 trillion ($1.06 billion) in February last year and spent $1.1 billion purchase of Dutch insurer Vivat (the old SNS Reaal insurance operations).

The life and non-life insurer bought 10% of China Minsheng Banking for $4.88 billion, Delta Lloyd Bank Belgium for $273 million and Belgian insurer Fidea.

Lacking visibility
Some analysts are concerned that Anbang lacks experience and brand recognition overseas, a big hurdle for an insurer selling products to the general public.

Insurers in China, including Anbang, have benefited recently from investment liberalisation and more liquidity, following several years of pressure on earnings from focus across the life insurance industry on quantity over quality in terms of products and more expensive insurance agents as wages rose across China.

Founded in 2004, Anbang is also well connected within China. Its chairman and chief executive, Wu Xiaohui, is the husband of late leader Deng Xiaoping’s granddaughter, according to reports and stock analysts. Deng spearheaded China’s opening up to the West. In China the group owns stakes in ICBC, about six insurers and two asset managers.

To be sure, Anbang has tried and failed to buy some assets. The unlisted group showed interest in buying Hong Kong’s Wing Hang but was eventually outbid by Singapore’s OCBC. It also bid for South Korea’s Woori Bank but was blocked by regulators.

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