• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Real Estate

Chinese HNA Group Tries to Put 'Communist Party' Ownership Talk to Rest

Deutsche Bank's largest shareholder ranks senior members of China's Communist Party among its owners, according to an exiled Chinese businessman. The company says that's false.
By ALEX FREW MCMILLAN
Jul 25, 2017 | 12:00 PM EDT
Stocks quotes in this article: DB, HLT, AVOL, BAC, MS, C

The Chinese conglomerate the HNA Group, equal parts mysterious and acquisitive, has outlined its ownership structure in response to pressure from banks and U.S. lawmakers. But its "revelations" raise as many questions as they answer.

HNA, which is the parent of Hainan Airlines SH:600221 and a dozen other subsidiaries, has pumped $40 billion into overseas acquisitions over the course of the last three years. But it faces accusations that it is owned in part by powerful members of the Communist Party. 

Its wheeler-dealing has seen it build billion-dollar stakes in Deutsche Bank (DB) , where its 9.9% holding means it is now the largest shareholder, and Hilton Hotels (HLT) , where its $6.5 billion investment gives it a 25% stake.

HNA is also buying SkyBridge Capital, the hedge fund of funds established by new White House communications director Anthony Scaramucci. The HNA sale would net Scaramucci up to $77 million, according to Forbes. But the deal has been delayed by the Committee on Foreign Investment in the United States, according to Bloomberg.

HNA said in a statement on Monday that a little-known businessman, Guan Jun, has donated his 29.5% stake in the company to the equally unheard-of nonprofit the Hainan Cihang Charity Foundation, which is registered in New York and was set up in December 2016. 

Another charity, the Hainan Province Cihang Foundation, owns 22.75% of the HNA Group. That's more than co-founders Chen Feng and Wang Jian, who each own 14.98 stakes in the group, with fellow co-founders Chen Wenli holding 3.95% of shares and Tan Xiandong, 2.95%.

Guan is a 30-something Beijing businessman who reportedly lives in a rundown apartment complex in the Chinese capital. His role in the company's ownership was first mentioned in a regulatory filing when HNA took over Swiss air caterer Gategroup Holdings.

Quite how an unknown young man built up such a large stake in HNA, which Bloomberg calculates would be the world's 45th-biggest non-financial company if listed, is not known. HNA's filing did not explain anything about Guan's role, other than to say he is a private investor who has not held a position with the group.

Guan acquired his stake from the Hong Kong-based financier Bharat Bhise, who has advised the HNA Group on its deals. Bhise has denied requests for an interview with The New York Times on his role with HNA.

Co-founder Chen Feng insisted, in an interview in late June with the South China Morning Post, that Guan owned a "tiny stake in the company" but was not a significant shareholder. Claims made by a maverick Chinese businessman that Communist Party officials were behind the company's ownership and operations are a "pack of lies," Chen said.

China's Communist Party leaders believe in sharing everything except information about their own wealth. Many of the party's most powerful members have built up million-dollar fortunes over the course of their time in power, which do not tally with their modest official incomes. 

Party bigwigs are desperate to disguise politically inconvenient and dubiously gained holdings. With a corruption crackdown under way in China, officials typically mask their wealth through "white-glove" holdings via third parties, or by putting them in the names of relatives. 

The controversial billionaire Guo Wengui, who lives in exile in New York City, has said that Communist Party officials and their relatives are undisclosed shareholders in HNA. The extensive hidden holdings go as high as members of the Politburo Standing Committee of the Communist Party of China, the country's cabinet, Guo claims. The company sued him for defamation, saying these statements harmed its reputation. 

HNA owns a listed subsidiary, HNA International Investments Holding HK:0521, a financial holding company that owns investments in golf courses, hotels, digital television and LED production. Hainan Airlines, China's fourth-largest domestic carrier by fleet size, is listed in Shanghai.

The airline started life in 1993 with four aircraft. Now a sprawling conglomerate based on the tropical island of Hainan, "China's Hawaii," HNA has been one of the most aggressive Chinese acquirers of overseas assets in recent years.

It was the biggest buyer of land for property development in Hong Kong last year, spending HK$27.2 billion ($3.5 billion) within four months on four high-priced lots at the redevelopment of Hong Kong's old airport, Kai Tak.

It has also spent $5 billion on electronics distributor Ingram Micro, $2.8 billion on cargo handler Swissport, $2.6 billion on the aircraft-leasing company Avolvon Holdings (AVOL) , and $1 billion on the Singaporean logistics company and commodities trader CWT Group.

Asking too many questions about HNA's backing raises hackles in China. Interpol, the international police unit, in April put out a "red notice" for Guo at the request of China's government.

Such a notice comes when a member nation has issued an arrest warrant or court order against someone. It is up to the host nation as to what action to take, which can include a provisional arrest on behalf of the nation that filed the "red notice" request.

Guo spends much of his time running his empire from a $68 million condo overlooking Central Park, making many of his most explosive comments by Twitter and YouTube. The United States does not have an extradition treaty with China and has yet to do anything about his presence in the country.

In its June defamation suit against Guo, HNA said the exiled billionaire made "baseless and meritless" claims about the company. The company also says that Guo has obtained confidential information about 146 clients of the HNA Group, including flight times, destinations and flight numbers, that he has used to spread "corruption" and "sexual" stories.

The summons cites allegations that "officials in China's Communist Party and their relatives are undisclosed shareholders" in the group, and that Hainan Airlines had let government officials and their relatives use its aircraft "for purely personal reasons."

Bank of America Merrill Lynch   (BAC) has decided not to do business with the HNA Group, Bloomberg said last week. Citigroup  (C) and Morgan Stanley  (MS) are avoiding such deals. U.S. and European lawmakers also want more information about its ownership before granting regulatory approval for its acquisitions.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Alex McMillan had no positions in the stocks mentioned.

TAGS: Investing | Global Equity | Regulation | Markets | Transportation | Financial Services | Consumer Discretionary | Real Estate | Technology | Emerging Markets | China | Corporate Governance | How-to | Politics | Risk Management | Short-selling | Stocks

More from Real Estate

When Did We Stop Worrying About the Wealth Effect?

Peter Tchir
Jul 5, 2022 1:00 PM EDT

This looks like a market pricing in a recession/policy mistake.

Kass: Untapped Homeowners Equity and Imbedded Gains Will Be a Ballast to Growth

Doug Kass
Jun 29, 2022 3:00 PM EDT

Homeowners equity has more than tripled in the last decade.

Global REIT American Tower Is Poised for a Rally

Bruce Kamich
Jun 21, 2022 10:13 AM EDT

Here's what traders could do.

Dozens of Stocks Suspended in Hong Kong Due to Problems in Accounts

Alex Frew McMillan
Apr 1, 2022 9:00 AM EDT

After missing yesterday's deadline day for filing full-year 2021 figures, many Hong Kong-listed, China-focused companies saw their shares stop trade.

Chinese Property Stocks Leap But Red Flags Abound

Alex Frew McMillan
Mar 30, 2022 9:48 AM EDT

There's a mounting list of Chinese developers that say they can't file their 2021 annual accounts in time, a likely sign of deeper trouble.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 12:01 PM EDT PAUL PRICE

    A Recent Director Buy in Children's Place (PLCE)

    Four of the most recent insider trades in Children...
  • 07:34 AM EDT PAUL PRICE

    A $525,000 Vote of Confidence on Macerich (MAC)

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login