China's Anbang, HNA had sights set on insurer Allianz

El-Erian, the chief economic adviser to Allianz: "Think of sterling as facing a double whammy with no strong anchor."

HONG KONG: China's Anbang Insurance Group and HNA Group both considered buying into German insurer Allianz SE this year as part of plans to become global financial powerhouses, people with direct knowledge of the matter said.

The separate talks, which were at an early stage and did not result in formal bids, were called off earlier this year due to expected regulatory hurdles in Germany and China and the fact that Allianz showed little interest, they added.

The Chinese conglomerates both weighed buying a majority stake in the world's fourth-largest insurer by market value - which is worth over $95 billion - while HNA was also open to a minority stake, two people involved in the discussions said.

It was "highly unlikely" that the talks to acquire a controlling stake in Allianz, one of nine insurers regulators say are of global systemic importance, would be revived in the near future, one of the people said.

A bid would have ran into political and regulatory hurdles as the insurer is a German stalwart that holds a huge amount of capital and is an important pillar for local pensions.

HNA's plan to buy an Allianz stake was first reported by Germany's Sueddeutsche Zeitung.

Representatives at Allianz, Anbang and HNA - which has announced over $50 billion in deals since 2015 including stakes in Deutsche Bank AG and Hilton Worldwide Holdings Inc - all declined to comment when contacted by Reuters.

Although the talks did not continue for long, the plans for possible separate bids for Allianz reveal ambition among Chinese conglomerates including Anbang and HNA to create a global empire through large, debt-fuelled acquisitions.

BINGE BUYING

Massive overseas deals has resulted in Chinese regulators ramping up scrutiny this year of outbound acquisitions - ranging from football clubs to movie studios - of groups including Anbang, HNA, Fosun and Dalian Wanda.

Beijing has increased restrictions on overseas acquisitions in recent months and has leant on domestic banks to reduce lending that helped fuel the shopping spree and saw local firms spending a record $221 billion on assets overseas in 2016.

And in June, China ordered a group of lenders to assess exposure to some of China's more aggressive dealmakers, including Anbang, Dalian Wanda, and HNA, the sprawling aviation-to-financial services conglomerate.

Anbang started discussing acquiring a controlling stake in Allianz in the second half of last year and had held informal talks with some banks, including select Wall Street banks, to seek advisory and lending support, the people said.

HNA had also held similar talks with some banks, they said. Besides regulatory roadblocks, the uncertainty about the ownership structures at the two conglomerates, however, led to some banks pulling back from those talks, the people said.

Similar to HNA, Beijing-based Anbang, whose main business is insurance, has been one of China's most aggressive dealmakers in recent years, and is best-known overseas for the record-breaking purchase of the Waldorf Astoria hotel in New York.

Anbang's overseas shopping spree included acquisition of Allianz's South Korean businesses -- Allianz Life Insurance Korea and asset management firm Allianz Global Investors Korea -- for more than $3 million last year. - Reuters