China’s overseas acquirers export capital and leave a ‘black eye’ for others investing abroad
Bankers and analysts say Chinese investors need more localised services to help them navigate and avoid pitfalls in overseas markets
China’s aggressive overseas acquisitions in the past few years have not only exported plenty of capital, gaining a spot in global deal league tables, but also less desired leftovers: stalled projects and abolished assets.
With Chinese capital inflows into foreign markets slowing on Beijing’s tightened controls, those who were acquired are beginning to feel the pain. New York city’s landmark Waldorf-Astoria hotel, bought by Anbang Insurance Group in 2014 for US$2 billion, is one.
The hotel has been closed for renovation for more than half a year since March 1, but work has yet to start with the US$1 billion renovation bill left hanging after Anbang’s once high-flying chairman Wu Xiaohui was taken away by Chinese authorities for investigation in early June.
While bankers said Beijing had ordered Anbang to sell the hotel in late July, no white knight has emerged so far.
“The most iconic hotel in New York is slowly decaying through neglect. A big black eye for all Chinese companies looking to invest. They [Chinese buyers] come across as untrustworthy, which is a PR disaster,” said Fraser Howie, a former banker in Asia who co-wrote three books on the Chinese financial system.
But in a statement to the Post, Anbang said they were “on track” to begin construction work this autumn. The company said they had spent four months until August “liquidating the non-historic items from the hotel, advancing design plans and securing permits, and carefully removing the hotel’s most prized historic items for safe storage”.