China's HNA Group Said To Be Eyeing Value Partners Stake

May 22 2017 | 11:12pm ET

Chinese conglomerate HNA Group is reportedly in discussions with Hong Kong-based Value Partners to buy at least some of chairman and co-founder Cheah Cheng Hye’s stake in the independent asset manager.

The group may explore adding to its position further from there, according to a Bloomberg article citing unidentified individuals familiar with the matter. A deal to buy some of Cheah’s holding could value Value Partners at north of $2 billion, the article continued. 

In a regulatory filing on Monday, Value Partners acknowledged that Cheah and fellow co-founder V-Nee Yeh had been approached regarding a potential deal by unidentified third parties and that negotiations were underway. Together, the two own approximately 41% of the company, Bloomberg added. 

If consummated, a transaction with Value Partners would be HNA’s fifth deal in the finance space in the past six months. In the first quarter of the year, it bought a stake in Anthony Scaramucci’s Skybridge Capital for $200 million, bought asset finance firm UDC from Australia’s ANZ Banking Group, and took a 9.9% stake Germany's Deutsche Bank. In late March, it agreed to buy 25% of Old Mutual’s OM Asset Management unit for around $446 million.

The moves are widely seen as steps to diversify HNA Group’s asset portfolio. A major international conglomerate with interests running from hotels to airlines, the company is run by Chinese billionaire Chen Feng, who has been steadily buying up global assets in recent years potentially as a hedge against depreciation of China’s currency. In 2016 alone, HNA announced and completed more than $30 billion in acquisitions, including Hilton Worldwide, the aircraft leasing business of CIT Group, and Ingram Micro.

Value Partners, which is publicly traded in Hong Kong, rose around 8% to HK$7.85 on the news Monday before it was halted. It is expected to resume trading tomorrow, according to Reuters. The company was founded in 1993 and manages more than $15 billion in AUM as of April 30, 2017 deployed across long-biased fixed income, multi-asset, alternative, relative return and thematic strategies.


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