After $17 Billion Deal Spree, Chen Juggernaut Loses in London

  • London City Airport was sold to group including AIMCo, Kuwait
  • Chen's HNA Group bought at least $17 billion assets in 1 year

After about $17 billion of acquisitions in the past year, Chinese billionaire Chen Feng hit a speed breaker -- his attempt to buy the London City Airport failed.

Chen, who two decades ago walked the aisle of his startup Hainan Airlines Co.’s lone airplane serving refreshments, lost the bid to a consortium including AIMCo, Ontario Teachers’ Pension Plan and Kuwait Investment Authority. His HNA Group was among the contenders, according to people familiar with the bidding process.

Chen Feng
Chen Feng
Photographer: Adam Dean/Bloomberg

The deal would have added to an acquisition spree that grew HNA into a $29 billion empire spanning hotels and supermarkets from France to Brazil, and an airline that won an investment from George Soros more than 10 years back. Chen, 62, has ambitions for HNA to expand into one of the world’s top 100 companies by the end of this decade and vault into the top 50 by 2030.

“It has always been in the DNA of the HNA group to expand by acquisitions,” Zhang Qi, an analyst with Haitong Securities in Shanghai, said Thursday.

A representative at the conglomerate’s communications office didn’t respond to two phone calls and an e-mail seeking comment.

Chinese Acquisitions

Private companies in China are starting to rival state-owned enterprises in heeding the government’s call to go global. Chinese buyers have announced plans to spend more than $77.2 billion this year through Feb. 26, according to data compiled by Bloomberg. That’s an almost 10-fold increase from this time last year and puts them on track to break records for the third year in a row, the data show.

HNA Group was founded in 1993 and its fortunes climbed as the resort island of Hainan --known as "China’s Hawaii" -- was designated as a province and a Special Economic Zone in 1988. Chen controls Hainan’s two main airports, as well as hotels and travel agencies in the province. HNA is also the biggest property developer in the provincial capital of Haikou.

The group runs hotels, supermarkets, department stores, insurance firms, ship repairs, logistics and airports, which last year generated combined revenue of 190 billion yuan ($29 billion). The conglomerate says its assets are valued at over 600 billion yuan and encompass 11 listed companies.

"HNA Group has been very aggressive and this has a lot to do with how the company’s culture has evolved over time," said Allen Lin, a Beijing-based project manager at the transportation and logistics practice of Roland Berger, a management consultancy. “The group has to be innovative to stay competitive and resort to non-organic ways to grow."

Among the latest acquisitions by HNA Group:

* February 2016: Tianjin Tianhai Investment Co., an HNA Group company, announced a $6 billion takeover offer for Santa Ana, California-based software distributor Ingram Micro Inc.

* January 2016: Bohai Leasing Co., 44 percent owned by HNA Group, completed its $7.6 billion acquisition of Avolon Holdings Ltd., paving the way for the formation of the world’s fourth-largest air lessor by asset value.

* HNA Group also bought a stake in Uber China Ltd. for an undisclosed amount.

* November 2015: HNA Group said it will buy 23.7 percent of Azul Linhas Aereas Brasileiras SA for 1.7 billion reais ($430 million) to become the biggest individual shareholder in Brazil’s third-largest carrier.

* August 2015: The group completed its purchase of 30 South Colonnade, an office building in Canary Wharf. The deal “is an important step for building its European portfolio, and will also promote the international image of HNA,” the company said.

* July 2015: HNA Group agreed to buy airport luggage handler Swissport International Ltd. from PAI Partners SAS for about 2.73 billion Swiss francs ($2.8 billion).

* June 2015: HNA Group bought 15 percent of Red Lion Hotels Corp. from a Seattle-based investment fund run by Columbia Pacific Advisors.

— With assistance by Clement Tan

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