Collapse of HNA’s Swiss IPO sets back $16 billion garage sale

Bloomberg

HNA Group Co.’s scrapped initial public offering of its Swiss airline caterer dialed up the pressure for the embattled conglomerate as it seeks to raise about $16 billion during the first half of the year to reduce one of the biggest debt piles in corporate China.
The IPO of Gategroup Holding AG would have raised between $917 million and $1.4 billion for HNA but investors balked at the price and the lack of clarity as to what the Chinese group would do with its remaining stake. If the deal had gone according to plan, it would have put HNA about halfway past its first-half disposal target.
The flurry of sales have reversed the situation up until early 2017, when HNA was at the forefront of a multiyear buying binge by Chinese conglomerates—think Anbang Insurance Group Co., Dalian Wanda Group Co. and CEFC China Energy Co.—who were gobbling up everything from New York’s Waldorf Astoria hotel to large stakes in Deutsche Bank AG. The seemingly insatiable appetite for trophy assets ended last year after the Chinese government stepped up scrutiny of “irrational” investments and borrowing costs soared.
Gategroup is the biggest asset sale that’s gone wrong but dozens of HNA assets have been sold or put on the block in recent months, enough for a bird’s eye view of one of the biggest corporate garage sales in Asia. A handful got divested at below purchase prices but most of the assets were unloaded at above their original cost, according to Bloomberg data.
For HNA, which started out as a fledgling regional airline, its empire-building years were fuelled by one of biggest piles of debt ever accumulated by a Chinese non-financial company. That ultimately came back to bite the group and forced it to sell billions of dollars of assets.
The company has sold at least $6.7 billion in properties or stocks— nearly all of them this year—and $7.5 billion of assets are up for sale, according to figures compiled by Bloomberg. A person familiar with the matter said in January that HNA’s proposal called for 80 percent of the total targeted disposals to be executed in the second quarter. Based on that, the company could be ahead of schedule.
The bulk of the assets for sale are real-estate properties in the US, UK and China, with the biggest one being the 245 Park Ave. tower it bought for $2.2 billion in 2017.