China's Anbang Insurance Plans First International Bond Issue

China's Anbang Insurance Group Co. is pursuing its first international bond offering as the acquisitive Chinese insurer raises money to fund its ambitions to grow abroad and at home, according to people familiar with the situation.

Anbang has held discussions with Credit Suisse Group AG and Goldman Sachs Group Inc. in recent months on plans for the offshore bond offering, the people said. The bond may offer rating firms and investors a peek into the finances and ownership of Anbang's unlisted parent company. It is unclear how much the company is seeking to raise through the offering, but the company plans to use the proceeds to invest in its insurance business in China and abroad, the people said.

Chinese companies have been on a record-breaking buying binge this year, having announced deals worth $213 billion overseas—more than doubling the $103 billion for full-year 2015, according to Dealogic. Anbang has emerged from relative obscurity in the past two years to take a spot at the forefront of China's global deal making by cutting big property and insurance deals abroad.

Earlier this year, Anbang bought the bulk of the assets that made up Strategic Hotels & Resorts Inc. for around $5.5 billion from Blackstone Group LP and acquired New York's marquee Waldorf Astoria for a record-breaking $1.95 billion in 2014. It is in discussions to buy a roughly $2.3 billion portfolio of Japanese properties from Blackstone.

Anbang and its chairman, Wu Xiaohui, have been as enigmatic as they have been aggressive. The Chinese insurer made an audacious $14 billion bid for Starwood Hotels & Resorts Worldwide Inc. in an attempt to break up Starwood's earlier deal to sell itself to Marriott International Inc. After raising its bid to compete with a revised Marriott offer, Anbang unexpectedly withdrew the offer.

The discussions for the bond offering are in the early stages, and no timetable has been set, the people cautioned. Credit Suisse and Goldman are advising Anbang on getting a credit rating, but Anbang hasn't given a formal mandate to the banks for a bond issuance.

Raising money from a diverse group of international investors requires more disclosure from the company. They typically expect credit ratings on new bond issuances from rating firms such as Standard & Poor's and Moody's Investors Service.

Anbang's potential disclosure of more information may address lingering questions about the group's ultimate ownership. Recent public filings show Anbang has a mix of corporate shareholders in sectors including cars and real estate, many themselves owned by multiple layers of holding companies registered all around China. Anbang has said previously that it is owned by more than 30 corporate investors that don't participate in the daily operation of the company.

Anbang's early investors included Shanghai Automotive Industry Corp., now SAIC Motor Corp., China's biggest auto maker, and state-owned energy giant China Petroleum & Chemical Corp., also known as Sinopec. Chen Xiaolu, the youngest son of revolutionary Communist Gen. Chen Yi, is a director, online Chinese corporate registry records show.

The new bond offering and a contemplated initial public offering in Hong Kong of Anbang's life-insurance unit next year are among the steps the Chinese insurer is considering that could raise more funds. Anbang has relied on Chinese bank loans and its insurance operations to provide the bulk of funding for its ambitions so far.

Insurance-industry analysts in China have warned that Anbang's aggressive acquisitions could be straining its books. Standard & Poor's said in November 2015 that it suspended its ratings on Vivat, the Dutch insurer Anbang bought last year, because it was "unable to secure sufficient information to accurately assess" Anbang's creditworthiness.

A spokesman for Anbang said S&P would rate Vivat after it rates its parent company, Anbang's life-insurance arm. Vivat has received positive ratings from other firms, Anbang said.

Several Wall Street banks haven't gotten internal clearance to pursue work with Anbang in the past, partly because it is unclear who effectively owns the company, people familiar with the matter said. None of those people said the banks had ruled out working with Anbang in the future, and many banks have pitched to work on next year's initial public offering of Anbang's life-insurance unit.

Anbang's life-insurance unit issued a 15 billion yuan ($2.2 billion) 10-year bond in December to domestic investors in China.

Write to Kane Wu at [e-mail] and Julie Steinberg at [e-mail]

(END) Dow Jones Newswires

November 24, 2016 05:55 ET (10:55 GMT)

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