image

HNA Group

HNA forms venture after US$775 million purchase of Glencore’s oil storage, logistics businesses

The completion of the purchase, announced in March, marks another step in the transformation of HNA’s strategy to align its acquisitions with the Chinese government’s pet projects and strategic interests.

PUBLISHED : Friday, 29 December, 2017, 6:59pm
UPDATED : Friday, 29 December, 2017, 7:07pm

HNA Group, one of China’s largest overseas asset buyers, said it has completed its US$775 million purchase of 51 per cent of the petroleum products storage and logistics business from the world’s biggest commodities producer Glencore Plc, forming a venture to pursue future investments along the ancient Silk Road.

HNA’s unit HNA Innovation Finance Group will own 51 per cent of the operation, and form a venture called HG Storage International to operate Glencore’s existing operations in Europe, Africa and the Americas, HNA said. Three of the assets located in the United States, originally intended for inclusion in the venture, will only be transferred to HG Storage after the acquisition is approved by the Committee on Foreign Investment in the US (CFIUS), Glencore said separately.

“This cooperation is against the backdrop of rising globalisation of trade, and China’s Belt and Road Initiative” to promote trade and investments along the ancient Silk Road from China to Europe and Africa, HNA Innovation Finance said in a statement. “It will facilitate China’s entry into the global commodities industry.”

The completion of the transaction, first announced in March, marks another step in the transformation of HNA’s business strategy. The Chinese company, whose shopping spree since 2015 has included golf courses, land in Hong Kong as well as stakes in Hilton Hotels and Deutsche Bank, is now aligning its acquisitions with the Chinese government’s pet projects and strategic interests.

For Glencore, the sale is part of its ongoing plan to reduce debt, following other disposals in its agriculture business and coal railways in Australia. HG Storage has consolidated Glencore’s petroleum products storage and logistics businesses into a “global portfolio of high-calibre assets, located in strategic trading hubs across Europe, Africa, the Middle East and the Americas,” according to a statement by the Anglo-Swiss company, based in Baar, Switzerland.

Hong Kong-based HNA Innovation Finance was set up in March, the youngest among seven of HNA’s affiliates.

The unit is engaged in commodity trade, financial investment and consumer finance. It was formed at a time when Beijing increased its scrutiny on overseas acquisitions by Chinese firms, and discouraged them from buying trophy assets particularly in the property, sports and entertainment sectors.

HNA’s chief executive Adam Tan Xiangdong said at the Caijing forum in Beijing last month that it would withdraw from property and other projects on Beijing’s blacklist and stick to investments encouraged by Beijing by “listening to orders”.

A month after announcing the stake purchase into Glencore’s oil logistics operation, HNA announced a US$1 billion takeover of Singapore logistics firm CWT Group through Hong Kong-listed HNA Holding, renamed this month to CWT International

business-article-page