ANZ should float UDC Finance on the sharemarket after its plan to sell the company to a Chinese conglomerate was rejected, NZ Shareholders’ Association says.
The Overseas Investment Office (OIO) rejected ANZ’s bid to sell its finance business UDC Finance to HNA because it could not determine who the “relevant overseas person” intending to make the purchase was from the information provided.
New Zealand Shareholders’ Association (NZSA) chief executive Michael Midgley said the deal was “messy, untidy and unfortunate” but ANZ dodged a bullet.
“It could turn out to be a good thing for New Zealand and investors rather than having this company disappear off into the hands of someone we don’t really know about,” Midgley said.
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“Here is a perfect opportunity for ANZ to float the company on the New Zealand sharemarket.
“It looks like a no brainer … it would be good for ANZ, good for New Zealand investors and shareholders and good for transparency rather than disappearing into virtually unknown hands.”
ANZ would not comment.
BNZ chair in business in Asia at Victoria University Siah Hwee Ang said that the OIO’s decision could strengthen New Zealand’s foreign relations with China as its government has been tracking the conglomerate’s every move for its expensive foreign acquisitions
ANZ announced plans to sell UDC Finance to HNA for $660 million in January.
Midgley, who attended an investor meeting where the bid from HNA was announced, said investors raised questions about the sale but at the time it all seemed clear.
Who is HNA?
HNA started out as an airline company that owned Hainan Airlines, a profitable airline, but in the past decade it had rapidly expanded garnering a huge debt, Ang said.
“Their rise in the international arena has been very fast… It’s almost come out of nowhere.”
Bloomberg reported that the HNA group had assets worth US$150 billion (NZ$213b).
International banks including the Bank of America Merril Lynch, Goldman Sachs have stopped doing business with HNA this year, and earlier this month Deutsche Bank was investigating whether HNA accurately reported its holdings when building its stake in the German bank.
In November a Swiss regulator ruled that HNA gave false information in its takeover of Zurich-based Gategroup.
In 2016, HNA paid A$393 million (NZ$431m) for a 19 per cent stake in Virgin Australia. And earlier this year it spent another A$400m (NZ$364m) buying a refrigerated logistics business from ASX-listed car dealership Automotive Holdings Group.
There is doubt about who HNA’s owners are, with some speculating it has that senior Chinese government officials and their families are ultimately large hidden shareholders.
In July, now-Deputy Prime Minister Winston Peters spoke out against the deal, saying the OIO should reject it.
“HNA Group is less a House of Cards and more a ‘House of Renminbi,” Peters said then.
Citing a Bloomberg report, he said: “It may be a case of rearranging the deckchairs on this corporate Titanic, but we now know it is majority owned by two charities, one on the island on Hainan and the other, bizarrely enough, in New York”.
“And who was listed as HNA’s single largest shareholder with 29 per cent of the company? The mysterious Guan Jun, has now been revealed as a front for HNA’s executives. This company is convoluted, enigmatic and so indebted, that the OIO must pull the plug,” Peters said in July.