Anbang Insurance’s $20bn hotel-buying spree has been thrown into doubt by reports that Chinese regulators could block its bids for two big US chains.
Caixin, a respected Chinese financial magazine, reported yesterday that the China Insurance Regulatory Commission could invoke a rule that restricts domestic insurance companies from investing more than 15 per cent of their total assets abroad.
The Anbang deals had a “small probability of completion”, one unnamed authority told the Chinese magazine.
Anbang declined to comment. But people close to the insurer played down the report. One said that nothing had materially changed for the Chinese group, which plans to press ahead with last week’s $6.5bn deal for Strategic Hotels & Resorts. Anbang is also evaluating whether to raise its $13.2bn bid for Starwood Hotels & Resorts.
Another person close to the dealmaking said that Anbang believed that the CIRC would become involved only if the hotel-chain purchases were funded with insurance premiums. If the chains were paid for another way, the deals would not require the regulator’s approval.
Anbang has yet to say how either deal would be financed and is keeping the regulator informed, the person said.
Anbang had sought to gatecrash Marriott International’s agreement to purchase Starwood but its offer was trumped by a revised bid from Marriott on Monday. Marriott’s offer, valuing Starwood at $13.6bn, was accepted by the target company.
Senior management at the Chinese group is convinced that Starwood has left the “door open” to a fresh bid, according to people close to the matter.
However, the Caixin report raises the possibility that the CIRC could prevent another counterbid by Anbang.
Starwood’s executives are keen to close the deal with Marriott as soon as possible, people familiar with the negotiation process said.
Anbang’s effort to buy up assets overseas is part of an unprecedented wave of outbound investment from China. Overseas spending by Chinese buyers this year has already reached $102bn, according to Dealogic, just $4bn shy of last year’s total of $106bn.