Four large asset buyers under scrutiny
July 10, 2017 Category Mergers & Acquisitions, Weekly
Four of China’s biggest offshore asset buyers – Anbang, Fosun, HNA Group and Wanda – were placed under regulatory scrutiny since mid-June, causing the prices of companies linked to them to plummet. The China Banking Regulatory Commission (CBRC), in an unusual move, ordered banks on June 6 to check the offshore exposures to these companies. The regulator was concerned about capital flight and money laundering. Even tough so far the CBRC could not pinpoint any wrongdoing, investors are getting cold feet. Shares of Shanghai Fosun Pharmaceutical Group plunged as much as 7% in Hong Kong and 8.9% in Shanghai, after rumors that the conglomerate’s Founder and Chairman Guo Guangchang had been “unreachable,” an euphemism implying that the person had been detained for investigations. Guo had indeed been unreachable, only because he had been in Xian delivering a speech and the delay of his return flight to Shanghai. Fosun issued two statements denying anything untoward. It was the second time in a month that Fosun had been struck by rumors. On June 22, Fosun’s shares along with those of Wanda, plunged on speculation that the CBRC was checking up on their loans, while the companies were affected by “political risks.” “All these big companies are in the spotlight as part of the clampdown on financial risk, but we are all in the dark as to what is really going on. Is it anti-corruption? Abuse of cross-border flows, illegal financing? Wasteful investment? We just don’t know,” said Fraser Howie, author of three books on China’s financial sector. “Large-scale investments made by private companies in China “should be fine,” said Li Daokui, a Tsinghua University Professor and former Advisor to the Chinese central bank’s monetary policy committee, as reported by the South China Morning Post.
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