China takes over insurer Anbang
The move furthers President Xi Jinping’s anti-corruption and deleveraging campaigns
China’s government will seize temporary control of Anbang Insurance Group Co. and prosecute founder Wu Xiaohui for alleged fraud, cementing the downfall of a politically-connected dealmaker whose aggressive global expansion came to symbolise the financial overreach of China’s debt-laden conglomerates.
The move furthers President Xi Jinping’s anti-corruption and de-leveraging campaigns while providing a government backstop for the high-yield investment products that Anbang sold to thousands of Chinese citizens. It suggests that after months of clamping down on acquisitive tycoons, China is increasingly acting to insulate the economy from their shaky finances.
It’s a remarkable turn for Anbang, which burst onto the global scene in 2014 with the purchase of New York’s Waldorf Astoria hotel and only a year ago was in talks to invest in a company owned by the family of Jared Kushner, US President Donald Trump’s sonin-law and senior adviser. With 2 trillion yuan (Dh1.16 trillion; $315 billion) of assets, Anbang represents China’s largest-ever takeover of a privately owned company.
“This is another step in China Inc.’s great unwinding,” Brock Silvers, managing director at Kaiyuan Capital, a Shanghai-based multi-asset advisory firm, said in an email.
Public example
“Given the determination exhibited by Beijing, and the public example of Wu Xiaohui’s cinematic implosion, China’s ‘crocodiles’ will surely redouble their efforts to address their balance sheets,” Silvers said, using a term for tycoons who engage in aggressive financial manoeuvres.
Chinese authorities, who first detained Wu in June, announced the Anbang seizure just days before the ruling Communist Party was expected to meet behind closed doors to approve personnel appointments and government restructuring decisions. Xi’s efforts to clean up the nation’s gargantuan financial system have accelerated in recent months as he prepares to begin a second term as president at the National People’s Congress in March.