Investment banks are jockeying for position as China moves to dismantle finance conglomerate Anbang. Swiss bank UBS has clinched a lucrative mandate on one side of the deal.
The Zurich-based bank will help the Chinese government to dismantle Anbang after the conglomerate was seized in February. Earlier this month, founder and ex-boss Wu Xiaohui was sentenced to 18 years in prison for embezzlement and fraud.
The power grab is part of a wide-ranging crackdown on corruption in China, and the winding down Anbang's myriad holdings around the world is a showcase piece of the process. Anbang owns everything from life insurers in the Netherlands, South Korea, and the U.S. to New York’s Waldorf Astoria hotel, which it bought in a landmark deal four years ago.
Scant Competition
The move means business for investment banks, which are angling either for jobs helping China sell Anbang's assets – or assisting bidders in getting a good deal on prime bits of the conglomerate.
UBS pitched for – and won – the advisory job alongside domestic bank CICC, the «Financial Times» reported. The Swiss bank had little competition for the role, as the broadsheet wryly noted: many bulge-bracket investment banking competitors obviously felt it could pay richer dividends to cater to potential buyers.
Private equity firms including KKR, Blackstone and Cerberus have expressed an interest in the Anbang assets, which UBS itself estimated amounted to $318 billion before the power grab. A spokesman for UBS declined to confirm the reported mandate, or otherwise comment.
Chinese Tightrope
In taking the job, UBS will have to walk a tightrope between maximizing the prices China can command for the assets, in the knowledge that it can hardly recoup the inflated prices Anbang paid for some of the assets in a spending spree.
UBS, which like many western lenders is bulking up in China, may have deliberately chosen the less-lucrative mandate as a glide path into further business in the country. Earlier this month, the Swiss bank became the first to apply for a majority stake in a Chinese finance firm after China relaxed foreign direct investment rules.
