Heavily-indebted HNA yanked a Swiss initial public offering which could have brought in as much as $1.37 billion. Will the Chinese conglomerate look to its Deutsche Bank stake to raise funds instead?
The Chinese conglomerate won't go ahead with an IPO of Gategroup that was supposed to go ahead in Switzerland this week, the two firms said in a statement on Monday. The reason? «A gap in valuation under current market conditions» – in other words, seller HNA couldn't drum up enough interest in Gategroup.
The offering for the Swiss in-flight catering firm was scrapped at the last minute after a sniffy reception from Swiss investors. Without the proceeds from Gategroup, Haikou-based HNA is likely to be scrambling for alternative ways to ease its debt burden.
The firm is heavily indebted after a $50 billion spending spree, financed in part by UBS, as finews.asia reported previously.
Debt Squeeze
HNA has been squeezed by the credit burden in recent months, and has dumped properties in Australia, New York, and Hong Kong and agreed to a deal with Citic Bank in Beijing for a cash injection. The conglomerate still owns 8.8 percent of German lender Deutsche Bank, after paring back slightly last month.
Until now, HNA has said it «will continue to be a significant investor in Deutsche Bank». The Chinese investor's methods have raised eyebrows in Europe, where German finance regulator Bafin is reportedly investigating, as well as in Switzerland over the 2016 investment in Gategroup.
Next IPO Eyed
The withdrawal of Gategroup's offering also raises questions over Swissport, another acquisition of HNA's which is slated for a public listing. The cargo handling firm is tied by loans to the Chinese conglomerate, which makes its floatation trickier than that of Gategroup.
The «FT» reported that Swissport said it will go ahead with its IPO before July. «Preparations are well on track with regards to the milestones of our IPO schedule and feedback from potential investors has been very positive,» the newspaper reported.
