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* UDC is NZ's biggest non-bank lender by far
* HNA's first foray into New Zealand, latest in string of
* Sale completion expected in H2 of 2017
By Jamie Freed and Charlotte Greenfield
SYDNEY/WELLINGTON, Jan 11 HNA Group, one of
China's most acquisitive conglomerates, said it would extend its
reach to New Zealand with the $460 million purchase of asset
finance firm UDC, prompting an immediate credit rating downgrade
for the nation's biggest non-bank lender.
HNA, best known as the owner of Hainan Airlines Co
, said the NZ$660 million acquisition from ANZ
Banking Group offered significant growth opportunities
in Australia and New Zealand and would create synergies in its
With a portfolio that ranges from car loans to equipment
finance, UDC is New Zealand's largest non-bank lender, with
$NZ2.6 billion in gross loans in 2016, according to KPMG. Toyota
Finance New Zealand ranks a distant second with NZ$777 million.
Standard & Poor's said, however, it would downgrade its
long-term rating of UDC to BBB from A-, given the likely loss of
timely financial support from ANZ and adding that UDC may face
challenges in maintaining its franchise in debt funding markets
and amongst some of its borrowers.
It also said the sale could also change the risk appetite of
UDC, which had traditionally been more conservative than other
New Zealand finance companies.
Other firms to be acquired by HNA have also been hit with
downgrades or placed on creditwatch. This includes Chinese
information technology outsourcing firm Pactera Technology
International Ltd which had its rating cut by Moody's Investors
HNA, which has over $90 billion of assets globally,
announced about $20 billion of deals in 2016 alone, Reuters
calculations showed. Among them was a $6.5 billion purchase of a
25 percent stake in hotel chain Hilton Worldwide Holdings Inc
UDC, which saw net profit rise 3 percent to a record $NZ58.5
million in the year to end-September, will join HNA's finance
arm, which operates a diverse set of businesses in equipment
leasing, insurance, and credit services.
ANZ said it expected the sale to be completed in the second
half of 2017 though it was subject to regulatory approvals. It
will need approvals from the Reserve Bank of New Zealand and the
Overseas Investment Office.
"The sale of UDC is consistent with our strategy to simplify
the bank," ANZ New Zealand CEO David Hisco said in a statement.
Last week, ANZ, which is seeking to boost capital and focus
on its strongest competitive points, agreed to sell its 20
percent stake in Shanghai Rural Commercial Bank Co Ltd for A$1.8
The bank is also considering the sale of its Australian
wealth and life insurance business, valued by the bank at A$4.5
(Reporting by Jamie Freed and Charlotte Greenfield; Additional
reporting by Matt Miller in Beijing; Editing by Edwina Gibbs)