Buyer of Scaramucci hedge fund faces more hurdles

At least two of HNA Group’s overseas deals have hit a hurdle as the Chinese conglomerate struggles to take money out of China, said sources, amid a widening crackdown by Beijing on debt-fuelled corporate acquisitions.

There has been increased scrutiny on HNA worldwide-— US officials are examining its proposed purchase of SkyBridge Capital, the hedge-fund firm founded by former White House communications director Anthony Scaramucci, who lost his job this week, while the ECB is considering a review of its stake in Deutsche Bank, sources said.

Those transactions are among more than $40bn (€34bn) of deals that HNA has announced since the beginning of 2016.

The two HNA deals hit by the crackdown on transferring money outside China are its announced acquisition of the London-based International Currency Exchange (ICE) for about £200m (€223m) and a mandatory tender offer to buy a larger stake in a Swedish hotel group, the sources said.

But HNA, which last year completed a $6.5bn purchase of a stake in Hilton Hotels, may need to wait till the end of this year to close the ICE transaction due to the new capital controls, said sources.

In the other deal, HNA has postponed the mandatory tender offer for acquiring all outstanding shares in Sweden’s Rezidor Hotel until September, according to two other sources and an announcement document from its unit HNA Sweden Hospitality Management.

China started gradually tightening capital outflows in the second half of last year, slowing the hectic pace of deal making by domestic companies looking to scoop up overseas assets ranging from movie studios to football clubs. The regulators stepped up pressure in June, ordering a group of lenders to assess exposure to some of the more aggressive dealmakers, including HNA, the property-to-film conglomerate Dalian Wanda and Anbang Insurance Group.

The stringent regulatory scrutiny of overseas deals, after Chinese companies spent a record $221bn on assets overseas in 2016, will not only cool new deal making but also impede the closing of some of the pending transactions.

In the case of HNA, one of its units that specialises in air travel, tourism, and hospitality management, HNA Tourism, said in April 2016 that it had agreed to buy ICE, one of the world’s largest foreign exchange retailers, as part of a European investment spree aimed at expanding its business.

The deal was expected to be completed in April this year, but HNA Tourism has for months been facing roadblocks in obtaining Chinese regulatory approval to move capital offshore.

Reuters, Bloomberg, and Irish Examiner