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Mystery deal in Canada throws spotlight on Chinese insurer

05/23/2016| 9:35:11 AM| 中文

An executive for Chinese insurance company Anbang led talks to buy InnVest properties, then represented another buyer when Anbang dropped out

In late March, shortly after Anbang dropped the Starwood bid, an executive from the insurer initiated talks to buy a portfolio of Canadian hotels owned by Toronto-based InnVest Real Estate Investment Trust, according to people familiar with the talks. As in the Starwood case, the Anbang team, led in this case by its Beijing-based executive Lydia Chen, spent weeks negotiating, then suddenly told InnVest that Anbang was no longer interested.

Instead, according to people familiar with the talks, Ms. Chen told InnVest there was another buyer: Bluesky Hotels and Resorts Inc., a newly formed Canada-based shell company backed by unnamed Hong Kong investors, the people familiar with the talks said.

Bluesky agreed to buy InnVest for C$2.1 billion (US$1.6 billion). The closely held company backed by capital from Hong Kong will pay C$7.25 a share, according to a Bloomberg report.

The deal would give Bluesky one of Canada’s largest hotel portfolios with 109 properties. InnVest, with a market value of C$731.7 million, has lost 20 percent in the past five years through Tuesday, while the benchmark Canadian index, S&P/TSX Composite index has been flat.

A spokesman for Anbang said: “Speculation linking Anbang to Bluesky is incorrect. There is no connection between Anbang and Bluesky.” A spokesperson for InnVest didn't immediately respond to a request for comment.

It is still unclear who is backing the BlueSky agreement to acquire InnVest. In a news release announcing the deal, BlueSky’s backers were identified only as Hong Kong investors.

Founded as a provincial car insurer, Anbang has raised its international profile in recent years as an aggressive bidder for overseas assets. It has spent billions on insurers and hotels around the world, including nearly $2 billion in February 2015 for New York’s iconic Waldorf Astoria.

It has been at the forefront of a wave of Chinese bids for foreign companies, with the dollar volume of such activity at a record pace so far this year.

Anbang’s speedy growth has required Chinese government support, from obtaining licenses from China’s insurance regulator to receiving approval for overseas investment. Anbang’s apparent ease in obtaining support has led many analysts to conclude that Anbang and its chairman, Wu Xiaohui, enjoy high-level political backing. The company has ties to some of China’s premier political families. Mr. Wu married the granddaughter of former Chinese leader Deng Xiaoping, and the son of a revolutionary Communist general is a director at Anbang, Chinese corporate registry records show.

Prominent Chinese business publication Caixin reported earlier this month that the Chinese Insurance Regulatory Commission was preparing to inspect Anbang to learn more about the company’s business. The focus of the investigation wasn't clear.

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TAGS: InnVest | Bluesky | Anbang
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