HNA to extend Glencore and CWT’s expertise in commodities and logistics along New Silk Road
Move comes amid Chinese government’s scrutiny of overseas investments
Chinese conglomerate HNA Group, a serial acquirer of aviation, finance and property assets overseas, plans to expand its commodities trade and logistics businesses along the New Silk Road as part of a strategic shift, amid Beijing’s scrutiny of mainland companies’ massive overseas investments made in the past few years.
Through its vehicle HNA Innovation Finance, the group plans to use Singaporean logistics firm CWT Group, and the business acquired from Swiss commodities trader Glencore International, to speed up expansion in countries that come under China’s Belt and Road Initiative, said Guo Ke, chief executive of the HNA Innovation Finance.
“HNA plans to use CWT as a platform in Asia for bulk commodity trade, logistics, management and ancillary financial services,” Guo said in an interview with the South China Morning Post.
Headquartered in Hong Kong, HNA Innovation Finance was set up in March and is the newest of seven affiliates under parent HNA Group. The unit mainly engages in commodity trade, financial investment and consumer finance.
In March, Guo’s unit entered into an agreement to purchase a 51 per cent equity interest in Glencore’s oil products storage and logistics business for US$775 million.
HNA Innovation Finance, through its Hong Kong listed HNA Holding, offered to acquire CWT in April for US$1 billion.
Guo said HNA would rely on Glencore’s expertise to run the business, while HNA would help it to better tap markets in Asia and China. “Glencore will help us to quickly enter the mainstream market and acquire cooperation partners and clients,” he said.
CWT is one of the major logistics and warehousing companies in Singapore, with about 6,000 employees and logistics facilities in Asia and Europe.
Gua said his plans for CWT include helping the company acquire domestic licences so that it can access the vast China market, “not only in tier one cities but also tier two and tier three cities”.
“This would help to increase HNA Innovative Finance Group’s revenue from the current 50 billion yuan (US$7.56 billion) to 80 billion yuan in a year, and 130 billion yuan to 140 billion yuan within two to three years.”
The Hainan-based HNA Group counts Hainan Airlines, Hong Kong Airlines and 25 per cent of the Hilton hotels group among its assets.
Its investment pace has slowed, along with Dalian Wanda, Fosun and Anbang, also major overseas buyers – amid a government crackdown on money laundering and capital outflows.
On Tuesday the company said it would “listen to orders” and “not invest a cent in areas forbidden by the government”.
“For projects we’ve already invested in – we weren’t stopped at the time of investment but now that the government forbids such investments, we will pull out,” said Adam Tan Xiangdong, chief executive of HNA Group at the Caijing forum in Beijing. “For property projects, we will withdraw and hand [the projects] to funds or Reits. I will sell all [overseas] buildings that I have purchased.”