HNA Group Wants $1.5bn For New Offshore Acquisitions Fund

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Debt-beleagured Chinese conglomerate HNA Group hopes to raise as much as $1.5 billion for a new investment fund that will pursue real estate and travel acquisitions abroad, according to a report from Reuters.

A document viewed by Reuters indicates that HNA Group unit HNA Aviation and Tourism Group plans to establish the Overseas Aviation and Tourism Industry Fund as an offshore vehicle for acquiring aviation, travel and real estate assets around the globe.

HNA commenced fund-raising this month, with a group-related limited partner already committing between $100 million $150 million in capital.

The document guarantees investors with a minimum return of between 8 to 10%, while HNA also hopes also attract limited partners for the fund with its expertise in the aviation sector.

The document outlines a shift in HNA’s acquisitions method, from use of its own balance sheet to fund deals to a much less risky model entailing sizeable contributions by institutional investors.

The move comes as the debt-laden conglomerate engages in a structural overhaul involving asset sales and corporate partnerships.

HNA is selling off more than $10 billion in assets, including its stakes in Hilton Grand Vacations, Hilton Park Hotels & Resorts and Hilton Worldwide.

On Monday the conglomerate announced that it had dialled down its stake in Deutsche Bank to 7.9% from 8.8%.

HNA racked up immense debts after it undertook a $50 billion M&A spree from 2016 to 2017, which prompted overseas regulators to eventually push back against the Chinese conglomerate.

Beijing also launched its own crackdown on the foreign purchasing sprees of debt-flush Chinese companies last year, reintroducing strict capital controls as well as ordering banks to restrict credit for foreign acquisitions.

 

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