HNA, SkyBridge drop acquisition; Scaramucci to return as partner

HNA Group and SkyBridge Capital have agreed to drop the Chinese conglomerate’s plan to acquire the investment firm. Founder Anthony Scaramucci will return as a co-managing partner.

The New York-based hedge fund and the aviation-to-real estate group plan to explore a relationship to distribute SkyBridge products in China, they said in a statement Monday.  

Both sides agreed that US government approval of the planned acquisition would have taken too long. Scaramucci, the former White House communications director, will focus on strategic planning and marketing for the fund, while the senior management and investment team will remain intact, according to the statement.  

HNA, which spent more than $40 billion buying assets across six continents since 2015, has been selling off real estate and stakes in companies this year amid a liquidity crunch and rising Chinese government scrutiny of overseas deals.

The Trump administration has also increased scrutiny of Chinese buyers amid trade tensions between the two countries. That push has stymied a string of planned takeovers, including Broadcom’s hostile takeover of chipmaker Qualcomm.  The Committee on Foreign Investment in the US (CFIUS), an interagency panel led by the Treasury Department, began its formal review of the proposed Skybridge acquisition in February, a person familiar with the matter said at the time. 

CFIUS doesn’t disclose or comment on its reviews. 

The transaction, which valued the fund of hedge funds firm at $180 million or more, was first announced in January 2017. 

Scaramucci, then best known for throwing lavish hedge-fund industry conferences in Las Vegas, was looking to sell his share in order to take a position in the Trump administration.  A subsidiary of HNA agreed to purchase a majority stake in the firm, while a little-known investment company called RON Transatlantic would increase its share.

Analysts said the deal, which valued SkyBridge at more than seven times EBITDA, or earnings before interest, tax, depreciation and amortization, was high for a fund-of-funds manager. Funds of funds have fallen out of favour in recent years for adding an extra layer of fees to already pricey hedge-fund investments. 

SkyBridge had about $10.4 billion in assets under management or advisement as of February, it said in the statement. Though the initial position for which Scaramucci sold his stake never materialised, the hedge fund impresario ultimately spent an eventful 10 days as Trump’s communications director in July, before being fired by incoming White House Chief of Staff John Kelly.