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HNA's financial sector push suffers new blow as ANZ axes unit's sale deal

Reuters 

By and Warrick

(Reuters) - and Ltd has dropped plans to sell its vehicle unit to after blocked the $460 million deal last month over concerns about the Chinese conglomerate's ownership structure.

had agreed to buy UDC Finance, New Zealand's largest non-lender, early last year. But in December cited uncertainty over HNA's ownership structure for the rejection.

The failed bid for UDC adds to recent setbacks that the aviation-to-property Chinese conglomerate has faced in its overseas push into the financial sector after spending $50 billion over the past two years in debt-fueled acquisitions.

These include large minority stakes in Deutsche and the U.

S. operations of

HNA's July announcement indicating two named shareholders were actually acting as proxies for the company's founding executives has increased international concerns about the group's transparency and governance, resulting in heightened scrutiny and due diligence checks from financial regulators and some global banks.

The UDC sale, which called off on Friday, was part of the lender's plans to offload assets to meet new capital requirements. had warned last month that it would back out of the deal unless managed to get the decision of the regulator overturned.

said on Friday it had nothing further to add at this time beyond its statement on the deal last month. It had said at that time the watchdog's decision was inconsistent with the views of other regulators around the world that had approved and other Chinese investments.

The failed UDC transaction comes a week after HNA's talks with Value Partners over purchase of a stake in the were called off, hurting its plan to expand beyond its base in airlines, tourism and logistics.

accounted for about 17 percent of the group's operating revenue of 183 billion yuan ($28.22 billion), and more than 40 percent of gross profit in 2016, led by its financial leasing operations, an bond filing shows.

Pressure on HNA's finances has risen after the told major banks in June to review their credit exposure to the conglomerate and a handful of other non-state companies.

The financial strains and increased borrowing costs have slowed its deal making pace and raised concerns about the group's liquidity situation.

is in talks with a leading Hong Kong for a loan to refinance its repayment liabilities linked to a land parcel in the Asian financial hub, sources told Thomson Loan Pricing Corp on Thursday.

said on Friday it would continue to assess its strategic options regarding UDC.

"It's a setback, yes...but it's not a bad outcome if they don't sell it, it's profitable, it generates good return on equity and fits nicely within the business," said David Ellis, an

"I'd say they will have a good chance of finding another buyer."

(Reporting by in Bengaluru and in Hong Kong; Additional reporting by in Beijing, Tom Westbrook and Paulina Duran in Sydney; Editing by and Muralikumar Anantharaman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, January 12 2018. 11:10 IST
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