January 18, 2017 / 8:26 AM / in 9 months

HNA buys SkyBridge to White House

BEIJING (Reuters Breakingviews) - HNA Group is hoping to buy a SkyBridge directly to the White House with its latest deal. The Chinese conglomerate is taking a stake in newly minted presidential adviser Anthony Scaramucci’s hedge fund. The business fit is a stretch, but the rationale of HNA making a friend on Trump’s team as it tries to expand in the United States is hard to avoid.

Anthony Scaramucci, Skybridge Capital founder and Donald Trump finance committee member, speaks during an interview in New York, U.S., October 6, 2016. Picture taken October 6, 2016. REUTERS/Shannon Stapleton - RTSR9NI

Neither SkyBridge nor HNA and RON Transatlantic, its partner in taking a majority stake, has revealed the terms of the deal. For its part, HNA probably shelled out less than $200 million, making it little more than an amuse-bouche for the deal-hungry aviation and shipping conglomerate. It gobbled up more than $17 billion in overseas assets in 2016, ranging from hotels and golf courses to U.S. cloud-computing company Ingram Micro, according to Thomson Reuters data. 

Last week, HNA spent $460 million on New Zealand-based leasing and investment company UDC Finance. That will help expand its nascent financial empire, which domestically spans asset management, life insurance and peer-to-peer lending as well as aircraft leasing.

There’s a big difference, though, between the services offered by its fledgling finance unit and the fund of hedge funds business SkyBridge is best known for. And it’s not as if HNA can suddenly offer its new acquisition’s services to Chinese investors: Beijing’s recent imposition of tighter capital controls, including limiting outflows, has put paid to that, possibly for several years.  

The potential return on the SkyBridge deal looks far more political than financial. The U.S. Congress has long been wary of Chinese dealmakers; of late even private companies like HNA have been tarred with the same brush as state-run concerns. President-elect Donald Trump has upped the ante by courting Taiwan and threatening to brand China a currency manipulator.

If buying a chunk of Scaramucci’s business has even a chance of offsetting that, HNA may consider it money well spent. Using government connections, after all, is how Chinese businesses often get their deals over the finish line at home. Granted, currying favour with one presidential adviser won’t suddenly clear a path through Congress, the Committee on Foreign Investment in the United States and a host of other regulators. But every advantage helps.

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