China's HNA Is Now Deutsche Bank's Biggest Shareholder -- WSJ
May 04 2017 - 3:02AM
Dow Jones News
By William Wilkes and Jenny Strasburg
FRANKFURT -- Chinese conglomerate HNA Group has become Deutsche
Bank AG's largest shareholder after increasing its stake in the
German lender to almost 10%.
U.S. public filings show HNA raised its stake to 9.92% through
C-Quadrat Asset Management (UK) LLP, the U.K. subsidiary of
Austrian asset manager C-Quadrat Investment AG. HNA previously held
a 4.76% stake in the lender, filings showed.
HNA's increased stake in Deutsche Bank makes it the lender's
largest shareholder, ahead of members of Qatar's royal family and
U.S. money manager BlackRock Inc., according to public filings.
HNA holds the shares through a special-purpose company managed
by C-Quadrat, which also holds the voting rights for HNA's Deutsche
Bank stake.
Deutsche Bank, HNA and C-Quadrat declined to comment.
In February, the German bank said, in response to news HNA had
become a major shareholder, that it "welcomed in principle any
investor with a long-term view."
HNA, through C-Quadrat, had signaled it was looking to increase
its stake, but not above 10%. Intentions to exceed that threshold
would trigger additional reporting requirements, and crossing the
10% ownership line would require German regulatory approval,
lawyers and analysts say.
Analysts say U.S. regulators also would scrutinize any potential
move by a single shareholder, including HNA, to amass a 10% or
greater stake in a financial firm like Deutsche Bank that has big
trading and investment-banking businesses in the U.S.
In March, Deutsche Bank said C-Quadrat's founder and chief
executive, Alexander Schütz, was nominated to join the lender's
supervisory board, ahead of the annual meeting scheduled for May
18. His appointment would give the managers of HNA's stake sway
over high-level decision-making and oversight of Deutsche Bank
management.
The German lender's shares have rebounded after hitting
multiyear lows last fall because of fears about its capital
position. Deutsche's recent earnings statements show its main
businesses are stabilizing after a tumultuous 2016, when fears of
big regulatory fines unnerved clients and investors. Investors
still harbor uncertainties about its ability to meet profit and
cost-cutting targets.
At Tuesday's closing price, HNA's 204.7 million-share stake was
worth about EUR3.4 billion ($3.7 billion).
Based in China's Hainan province, HNA Group began as an airline
operator before expanding into hotels, tourism, logistics, real
estate and finance. HNA's most high-profile acquisitions have been
U.S.-based companies. The firm last year took a roughly 25% stake
in hotelier Hilton Worldwide Holdings Inc.
HNA gained attention this year for investing abroad despite
strict capital controls in China. The group's executives have said
the group largely finances takeovers through offshore cash flow, so
it doesn't have to move cash out of China to continue its shopping
spree.
"Everyone is passionate, full of hormones, dying to achieve
things." Gao Jian, the group's chief operating officer has said of
HNA's acquisitions strategy.
The group in late March made an indicative bid for HSH Nordbank
AG, a state-owned German bank struggling with billions in soured
shipping loans.
Deutsche Bank last month completed an $8.5 billion capital
increase in which HNA Group and other shareholders participated,
people close to the matter said at the time. The fundraising,
Deutsche Bank's third since 2013, aimed to soothe concerns about
the strength of the bank's capital buffers.
--Kane Wu contributed to this article.
Write to Jenny Strasburg at jenny.strasburg@wsj.com
(END) Dow Jones Newswires
May 04, 2017 02:47 ET (06:47 GMT)
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