One of China's Most Aggressive Deal Makers Slams on the Brakes -- Update

By Julie Steinberg Features Dow Jones Newswires

One of China's most prolific overseas acquirers, the airlines-and-hotels conglomerate HNA Group Co., is drastically slowing its deal making, suggesting that a government crackdown on debt might be crimping its global ambitions.

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HNA has recently told people involved in its deals that it is putting mergers-and-acquisitions activity on hold for now, said some people familiar with the discussions. The group is looking at fewer targets and engaging in fewer discussions about potential acquisitions, another person familiar with HNA's plans said.

The people said, however, that HNA is still discussing investments in asset-management firms and financial institutions -- a high priority for the group -- and that there are a range of deals in the pipeline that could be ready to go when HNA wants to execute them. The deals HNA has already announced are likely to go through, some of the people said.

The conglomerate didn't immediately respond to a request for comment.

HNA's deals hiatus sidelines one of the last big Chinese companies that was still aggressively pursuing deals overseas this year, after a push by the country's regulators to curb a massive flow of money abroad in 2016. Outbound investments by Chinese companies, which hit a record last year, had already fallen sharply this year after mainland officials tightened scrutiny of big purchases abroad.

Then in June, China's banking regulator began examining leverage at several highflying Chinese conglomerates, including HNA -- in an extension of a wide-ranging regulatory campaign to rein in ballooning debt levels.

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One of those conglomerates, Anbang Insurance Group Co. -- which caught global attention with the purchase of New York's Waldorf Astoria for nearly $2 billion -- had already reined in the pace of its deal making. Another, Dalian Wanda Group -- which bought Hollywood producer Legendary Entertainment for $3.5 billion -- said earlier this week that it was selling most of its domestic theme parks and hotels, in a deal that would slash its debt levels.

HNA has announced $5.66 billion worth of overseas deals so far this year. Among recent investments, it spent $6.5 billion to acquire a stake in Hilton Worldwide Holdings Inc. and $446 million to buy a stake in OM Asset Management PLC, the U.S. money-management arm of British insurer Old Mutual PLC. Earlier this year, it borrowed roughly $3 billion to help build a big stake in Deutsche Bank AG. HNA is now the bank's biggest shareholder with nearly a 10% share.

The group is trying to expand in the financial-services sector, hoping to capitalize on changes the industry is undergoing, Guang Yang, a top executive, told The Wall Street Journal earlier.

China's nonfinancial outbound direct investment dropped 45.8% to $48.19 billion in the first half of the year from the same period a year earlier, according to state-run Xinhua News Agency, which cited data from the Ministry of Commerce.

Write to Julie Steinberg at julie.steinberg@wsj.com

(END) Dow Jones Newswires

July 13, 2017 14:06 ET (18:06 GMT)