ANZ bid to sell UDC Finance to Chinese rejected

Thursday, 21 December 2017

ANZ announced plans in January to sell UDC Finance for $660 million to the Chinese conglomerate.

The Overseas Investment Office (OIO) has turned down an application from Chinese company HNA group to buy ANZ's UDC finance.

The country's largest bank made the announcement to the NZX on Thursday morning.

'If the sale does not proceed, we'll assess our strategic options regarding the future of UDC,' says ANZ chief executive David Hisco.

The OIO said it could not determine who the 'relevant overseas person' intending to make the purchase was from the information provided.

This meant the test in section 18 of the Overseas Investment Act - which covers whether a person is of good character - was not met.

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'While the sale agreement between the parties remains in place, unless HNA successfully overturns the OIO decision, the sale will not proceed,' ANZ chief executive David Hisco said.

'We don't know if HNA will attempt to overturn the decision.'

HNA said in a statement: 'We are disappointed by the OIO's decision and find it inconsistent with the views of other regulators around the world that have recently issued approvals to HNA and other Chinese investors.

'The current political environment in New Zealand relative to foreign investment will play a significant role in our determination of next steps.'

The company said it would not comment further.

The Prime Minister's office declined to comment, saying the matter had been delegated to OIO.

Full copies of the OIO decision will be published in the New Year. HNA can ask the High Court to review the decision but has not said if it will so so.

In July, now-deputy Prime Minister Winston Peters spoke out against the deal, saying the OIO should reject it.

'HNA Group is less a 'House of Cards' and more a 'House of Renminbi.' Peters said then, adding that the group's ownership made a Byzantine Maze look like child's play.

Citing a Bloomberg story, he said: 'It may be a case of rearranging the deckchairs on this corporate Titanic, but we now know it is majority owned by two charities, one on the Island on Hainan and the other, bizarrely enough, in New York.'

'And who was listed as HNA's single largest shareholder with 29 per cent of the company, the mysterious Guan Jun, has now been revealed as a front for HNA's Executives. This company is convoluted, enigmatic and so indebted, that the OIO must pull the plug,' Peters said in July.

ANZ announced plans in January to sell its asset finance business UDC Finance for $660 million to the Chinese conglomerate, a Fortune Global 500 company.

Hisco said then that sale was a strategic move by the bank so it could focus on its core banking activities.

Its purchase by one of the world's largest asset finance and leasing companies was a vote of confidence in the New Zealand economy, he said in January.

Founded in 1993, HNA Group started as a regional airline and grew into a global company with more than US$90 billion (NZ$128b) in assets, US$30b in annual revenue and almost 200,000 staff.

The financial arm of the company operated China's largest non-bank leasing company and one of the world's largest container leasing businesses.

On Thursday, following the OIO decision, Hisco said: 'If the sale does not proceed, we'll assess our strategic options regarding the future of UDC. It's a great business and there is no immediate requirement to do anything, particularly given the strength of ANZ's capital position.

'UDC continues to be a highly profitable and strong business, with great staff and customers, and a growing loan portfolio across a range of industries.

He said it would be business as usual for staff and customer as the focus remained on UDC's core business of financing vehicles and equipment for people and companies across New Zealand.

National's Steven Joyce wouldn't comment on this particular deal but said Government ministers needed to speak up to make it clear that New Zealand is still open for business.

'They need to [make it clear] that we welcome international investment and this individual decision doesn't signal any lessening of interest in that,' Joyce said, adding it was important to counter any impression potential investors overseas may get from coverage that could hurt economic growth.