The Overseas Investment Office said today it had declined the Chinese HNA Group’s application to buy UDC Finance Ltd from the ANZ Bank for lack of ownership transparency.
International concerns about HNA’s opaque nature have circled the acquisitive group for months.
TIP-HNA NZ Holdings Ltd – immediate owner Global TIP Holdings 5 BV of Amsterdam – applied under the Overseas Investment Act to acquire 100% of the shares in UDC Finance Ltd from ANZ Banking Group Ltd.
ANZ agreed in January to sell UDC, plus the Esanda name & trademarks in Australia & New Zealand, to HNA for $660 million.
But the Overseas Investment Office said in its decision today: “The information provided about ownership & control interests was not sufficient or adequate for the OIO to determine who the relevant overseas persons are for TIP-HNA’s application to acquire UDC.
“We were therefore not satisfied that the investor test in section 18 of the Overseas Investment Act was met. Without knowing who the relevant overseas person is, the OIO cannot be satisfied that section 18 has been met, therefore we are unable to grant consent.”
The decision was delegated to the Overseas Investment Office as it involved significant business assets only. TIP-HNA can apply to the High Court for a judicial review of the decision. The Overseas Investment Office said it would publish copies of decision documents on its website early in the New Year.
ANZ assesses options
ANZ group executive & NZ chief executive David Hisco said: “While the sale agreement between the parties remains in place, unless HNA successfully overturns the OIO decision the sale will not proceed.
“We don’t know if HNA will attempt to overturn the decision. If the sale does not proceed, we’ll assess our strategic options regarding the future of UDC. It’s a great business and there is no immediate requirement to do anything, particularly given the strength of ANZ’s capital position.
“UDC continues to be a highly profitable & strong business, with great staff & customers, and a growing loan portfolio across a range of industries.
“UDC’s focus remains on its core business of financing vehicles & equipment for people & companies across New Zealand. So, it will be business as usual for our staff & customers.”
Mr Hisco said this OIO decision had no impact on the recently announced $A1.5 billion on-market buyback of ANZ shares. The UDC transaction proceeds are equivalent to about 10 basis points of APRA CET1 capital. If the transaction does not go ahead, ANZ’s 2018 financial year earnings will no longer be adjusted for the sale.”
HNA in pursuit of growth through acquisitions
The HNA Group is based on Hainan Island off the south coast of China and operates globally in the tourism, logistics & financial services sectors. One of its subsidiaries, Hainan Airlines, began a regular service of 3 flights/week between Shenzhen & Auckland on 31 December 2016. In October 2016, HNA agreed to buy 25% of Hilton Worldwide Holdings Inc from asset manager the Blackstone Group LP for $US6.5 billion.
HNA Group was founded on the business of Hainan Airlines Ltd in 1993 and has grown through acquisitions over the last 6 years into an international conglomerate with $US90 billion of assets. TIP Trailer Services is a European transport & logistics arm of HNA.
OIO, 21 December 2017: Overseas Investment Office declines consent to TIP-HNA
Bloomberg, 11 December 2017: HNA unit bonds fall to record amid concern of lender support
7 December 2017: HNA rules out default in coming years after yield surge
China Human Rights Accountability Centre, 15 August & 19 October 2017: Open letter: Call for investigation into HNA Group’s activities in the US and probable links with corruption at top of Chinese Communist Party
12 January 2017: ANZ sells UDC Finance to Chinese HNA Group
30 October 2016: Hainan conglomerate adds Hilton stake to its international expansion
Attribution: OIO & ANZ releases, HNA.