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Caixin

Remains of China's Anbang go on sale with $5.2bn valuation

Government exit offers insight into how Beijing deals with too-big-to-fails

The sale marks the government's effort to put Anbang Insurance Group's remaining assets back into private hands.   © AP

The Chinese government is looking to sell nearly 99% of its stake in troubled insurance company Anbang, which is valued at 33.6 billion yuan ($5.2 billion), public records show.

The sale, which runs until Aug. 12, marks the government's latest effort to put Anbang Insurance Group's remaining assets back into private hands and recoup as much of its bailout funds as possible three years after taking over the scandal-ridden insurer.

The restructuring is widely seen as a template for how China deals with debt-ridden companies that are considered too big to fail.

China Insurance Security Fund (CISF), a company that funds bailouts, and oil giant Sinopec Group, both state-owned, are selling their respective 98.23% and 0.55% stakes in Dajia Insurance Group, the company created to take over the assets, according to a post released Friday by the Beijing Financial Assets Exchange.

The sale of the combined 98.78% stake has attracted six consortia, Caixin revealed last week. One is led by e-commerce company JD.com and Hopu Investment Management, a private equity company headed by Fang Fenglei, a former Goldman Sachs banker, sources close to Dajia said.

One of the other consortia consists of state-run investment company Xiamen International Financial Technology and Primavera Capital Group, another private equity company also led by a former Goldman Sachs banker, Fred Hu, the sources said. The consortium also put in a bid as part of Dajia's aborted restructuring effort last year.

Other potential buyers include online insurer ZhongAn Online P & C Insurance, and state-owned carmaker Chery Automobile, they said.

Anbang is among a group of high-profile Chinese companies whose debt-fueled expansions in recent years brought them billions of dollars in assets both at home and abroad. Many have been forced to sell off their assets after Beijing warned in mid-2017 of risks posed by their enormous debt to the country's financial system.

Starting out as a minor car insurer in 2004, Anbang began making global headlines in 2014 with a massive overseas shopping spree, picking up pricey assets like New York's iconic Waldorf Astoria hotel.

Behind the scenes, Anbang founder Wu Xiaohui leveraged his ties to a key political figure -- his most recent wife is a granddaughter of the late Deng Xiaoping -- and portrayed himself to outsiders as highly connected. By lobbying financial regulators and other government officials, Wu pushed for regulatory changes and controlled multiple financial institutions, which helped boost Anbang's total assets to more than 3 trillion yuan in 2018, Caixin previously reported.

In 2018, Wu was sentenced to 18 years in prison for fundraising fraud and embezzlement.

Regulators took over Anbang that same year, marking the beginning of a state-led restructuring. Shortly after the takeover, CISF injected 60.8 billion yuan into the technically insolvent insurer. As of end-June 2018, Anbang's total liabilities were 82.8 billion yuan greater than total assets.

As part of the restructuring plan, CISF established Dajia in June 2019, which absorbed Anbang's core insurance and asset-management businesses, with the goal of introducing strategic investors and turning Dajia into a privately owned company.

By June 2020, Dajia had accepted bids from two consortia to become new investors: one consisting of Primavera Capital and Xiamen International, and the other including electronics giant TCL Technology Group, Caixin revealed last year.

TCL later bowed out of the bidding due to the impact of the COVID-19 pandemic, which hammered some of Dajia's assets. With just one consortium committed to making an investment, CISF would have been left holding 63% of Dajia.

The restructuring plan flopped in the end, as it would not have turned Dajia into a privately controlled company and could have resulted in a loss of the bailout fund company, according to sources with knowledge of the matter.

That led to the current attempt to find new investors, with the primary goal to recoup as much of CISF's 60.8 billion yuan investment as possible, the sources said.

Tang Ziyi contributed to this report.

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Read also the original story.

Caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Nikkei recently agreed with the company to exchange articles in English.

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