CICHY China Construction Bank Corp (PK)

HONG KONG—Chinese insurer Anbang Insurance Group Co., which just upped the ante in a bidding war for Starwood Hotels & Resorts Worldwide Inc., made three unsuccessful offers last year to purchase the same U.S. luxury hotel chain.

Each time, Anbang and its chairman, Wu Xiaohui, were pressed by Starwood and its bankers for details on how they would pay for the deal, according to public filings by Starwood. On the third attempt on Nov. 3, Anbang withdrew its offer in the middle of a meeting with Starwood executives, the filings say, after Starwood told the Chinese insurer it wouldn't be able to proceed without financing details.

Anbang has exploded onto the international scene in recent years by spending billions to acquire insurers and hotels throughout the world. In February 2015, it laid out nearly $2 billion to buy New York's Waldorf Astoria, the highest price ever paid for a single U.S. hotel. It is also a big player at home, with stakes in listed Chinese developers and banks, while also investing in a traditional Chinese medicine maker and a wind-turbine manufacturer.

On Monday, Starwood said Anbang had made a new, $14 billion all-cash offer for Starwood, continuing a bidding war with Marriott International Inc. that started earlier this month. Starwood said the revised, nonbinding offer from the Anbang-led consortium, which includes private-equity firms J.C. Flowers & Co. and Primavera Capital Ltd., was "reasonably likely" to top Marriott's.

Marriott said Monday it remains committed to its latest offer of cash and shares, worth $13.6 billion when announced last week, which it believes offers "greater long-term value" to Starwood shareholders. Starwood and Marriott shareholders are slated to vote on their deal on April 8.

Complicated ownership

For all its ambition, Anbang remains opaque to many both inside and outside of China. Its ownership, as of its most recent public filings, is a mash of corporate shareholders, with multiple layers of holding companies registered all around the country.

Asked for comment, Anbang said it is owned by 31 corporate investors that don't participate in the daily operation of the company. It added that its strategic and investment committee selected the investors in 2014 out of over 300 interested parties.

The Beijing-based company has gotten financial backing from state lender China Construction Bank Corp. for its Starwood bid, people familiar with the matter said earlier, and it owns big stakes in other Chinese banks. Yet insurance-industry analysts in China have warned that Anbang's aggressive acquisitions could be straining its books. Standard & Poor's in November said it suspended its ratings on Vivat, the Dutch insurer Anbang bought last year, because it was "unable to secure sufficient information to accurately assess" Anbang's creditworthiness.

Anbang said in a statement that S&P would rate Vivat after it rates its parent company, Anbang's life insurance arm. Vivat has received positive ratings from other agencies, Anbang said.

Several Wall Street banks haven't gotten internal clearance to pursue work with Anbang in the past, partly because it is unclear who effectively owns the company, people familiar with the matter said. None of those people said the banks had ruled out working with Anbang in the future.

Anbang didn't dispute accounts of individual banks that have declined to do business with it. In a written statement, it said: "Anbang has engaged in and has fully complied with all corporate governance and internal compliance procedures, including 'Know Your Customer' regulations, with top-tier financial advisers, such as Bank of America Merrill Lynch, Credit Suisse, Deutsche Bank, Evercore Partners, Goldman Sachs, Nomura and PJT Partners." It added that regulatory authorities in Asia, Europe, and the U.S. had approved Anbang acquisitions in the past.

Anbang acquisitions have been cleared by a number of government oversight bodies, including Dutch and South Korean insurance regulators and the Committee on Foreign Investment in the U.S., or CFIUS. CFIUS review includes an examination of the ultimate beneficial ownership of foreign companies, lawyers said.

"We've worked with Anbang senior leadership for many years now and have always found them to be astute businesspeople," said Chris Flowers, chief executive of J.C. Flowers, in a statement. "We have seen them successfully execute deals in multiple jurisdictions and we have had several successful interactions with them."

Anbang was founded to sell car insurance in 2004 in the city of Ningbo, just south of Shanghai, with a cast of powerful backers. Early investors include Shanghai Automotive Industry Corp., now SAIC Corp., China's biggest car company, and state-owned energy giant China Petroleum & Chemical Corp., also known as Sinopec. Chen Xiaolu, the youngest son of revolutionary Communist general Chen Yi, is a director, online Chinese corporate registry records show.

By 2010 Anbang had won coveted licenses from China's insurance regulator to sell property, life and health insurance as well.

Today, Anbang says it has $254 billion (1.65 trillion yuan) in assets and that its goal is to become one of the "top 10 comprehensive financial groups in the world." In 2014, Anbang had nearly $4.2 billion in net profit and a net return on equity of 37%, according to a video of a presentation Mr. Wu made last year at the Global Insurance Forum in New York, which was held at Anbang's newly purchased Waldorf Astoria.

"The shareholders want to build Anbang into a global financial empire, rather than a pure insurance firm," said Eva Liu, an analyst at Z-Ben Advisors, a Shanghai-based consulting firm.

Anbang has been spending billions to build that empire at home and abroad. Mr. Wu has set his sights on battered European financial firms such as Vivat and Belgium's Delta Lloyd Bank that are inexpensive and could prove a source of funding for further investments. He is also snatching up high-quality hotel properties with strong cash flow.

In a transcript of remarks Anbang says were given at a Harvard University recruitment event last year, Mr. Wu gives a folksy description of the company's investment strategy, saying Anbang is targeting high-returning assets in five areas, corresponding to five fingers, from the Internet and real estate to life sciences.

In overseas acquisitions, it is important for Anbang to "win the first battle and every battle thereafter as we are representing Chinese enterprises going global," he said.

China's slowing growth could be hastening Anbang's push abroad. In a January 2015 interview in Caixin, a Chinese business magazine, Anbang director Chen Xiaolu says he advised Mr. Wu to invest in U.S. dollar assets because China's domestic economic growth was slowing while the U.S. was recovering.

Anbang's investors include a collection of 39 Chinese companies in sectors from cars to real estate, according to online corporate registry filings viewed by The Wall Street Journal. Local media have said some of those firms may have ties to the family of former Chinese leader Deng Xiaoping, whose granddaughter married Mr. Wu.

Mr. Wu and members of the Deng family couldn't be reached for comment. Anbang didn't make executives at the company available for interviews.

A due-diligence report on Anbang compiled for a global investment bank and viewed by The Wall Street Journal noted Anbang's reported connections with the Deng family as well as recruitment of former senior Chinese officials.

The report noted questions about Anbang's funding, particularly the source of nearly 50 billion yuan worth of capital put into Anbang in 2014 by 31 new shareholders with names including Ningbo World Automobile City Co. Ltd. and Dream Future Investment Co. Ltd.

A person answering the phone at Ningbo World Automobile City said she didn't know about the company's relationship with Anbang and declined to make anyone else available to answer questions. The mobile phone for Dream Future listed in the Beijing corporate registry was powered off.

Anbang's approach to international investments represents a change in tone among Chinese acquirers, who in the past timidly stepped into foreign markets. So far this year, Chinese buyers have launched bids for over $100 billion in overseas deals. In the latest acquisition wave, Chinese buyers have shown themselves willing to make aggressive bids for foreign targets, sometimes breaking up already-agreed deals or seeking control of sensitive targets. Many of the Chinese buyers are helmed by charismatic leaders with strong political connections and backing from state lenders.

'Ordinary' person

Little verified information exists in the public domain about Mr. Wu, who is 49 years old. He describes himself as an "ordinary" person whom employees can "email directly" in remarks on Anbang's website, which the company said Mr. Wu gave at the 2015 Harvard event. Anbang said he has a public administration degree from the National University of Singapore.

In 2014, Anbang's growth went into overdrive. It more than quintupled its registered capital, or shareholder equity, from 12 billion to 61.9 billion yuan, online corporate registry records show, making it the largest Chinese insurer by that measure, though not by policies or sales.

Before 2014, shareholding in Anbang was concentrated among a small group of investment firms as well as Sinopec and SAIC. With the capital raise, Anbang brought on 31 new shareholders, including little-known investment, real-estate and automotive companies spread around China. As of the end of 2014, the last date for which online corporate registry records are available, no single entity had contributed more than 4% of Anbang's registered capital.

Some of the companies that invested in Anbang in 2014 appear to be related. According to online corporate registry records, some share current or former shareholders and legal representatives, or people appointed to act on behalf of the companies.

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March 28, 2016 18:55 ET (22:55 GMT)

Nine of Anbang's new investors were registered in Sichuan province roughly within a month of each other, in December 2012 and January 2013. Several of the Beijing companies which invested in Anbang in 2014 at one point listed the same contact email address, the online corporate registry records show. Emails to that address went unanswered, and mobile phones for the three companies listed in the Beijing corporate registry were turned off.

Sichuan province-registered Shuangliu Guoyi Investment Co. Ltd., which contributed roughly 3.6% of Anbang's registered capital in September 2014, is in turn owned by a Jiangsu Province-registered car dealership, according to Chinese corporate registries. The dealership's majority shareholder is a Beijing-registered technology company owned by two individuals for whom contact information wasn't listed and who couldn't otherwise be reached.

Prior to December 2014, the Jiangsu car dealership was owned by a Shenzhen-registered car dealership, which itself contributed 3.7% of Anbang's registered capital. Before May 2014, Shuangliu Guoyi was owned by a Zhejiang investment company.

A person answering the number listed in the corporate registry for Shuangliu Guoyi hung up when asked a question about Anbang. The Shenzhen car dealership and Zhejiang investment company couldn't be reached for comment, and a person answering the number listed for the Beijing technology company said it was the wrong number. The company couldn't otherwise be reached. A person answering the phone at the Jiangsu car dealership said she didn't know about the company's relationship with Anbang and declined to make anyone else available to answer questions.

Anbang's growth has required Chinese government approval every step of the way, from getting licenses from China's insurance regulator to navigating the thicket of agencies which approve outbound foreign investment.

"The fact that the company has been allowed to flourish both domestically and outside of China indicates pretty consistent and strong support from the Chinese government at a very high level," said Victor Shih, a political-science professor at the University of California-San Diego.

In 2014, Anbang also accelerated its overseas buying spree. It agreed to purchase the Waldorf Astoria from Hilton Worldwide Holdings Inc. in October of that year. Mr. Wu pledged to renovate and furnish the landmark property with a Chinese restaurant designed to "showcase the true depth of the country's cuisine," according to the hotel's website, in time for last year's United Nations General Assembly. Chinese President Xi Jinping stayed there during the U.N. meetings, while President Obama decamped to the New York Palace Hotel.

Mr. Wu now hobnobs with one of the world's richest private-equity investors, Stephen Schwarzman of Blackstone Group LP, which agreed to sell luxury hotel group Strategic Hotels & Resorts Inc. to Anbang earlier this month for around $6.5 billion including debt.

At the Harvard recruitment event, Mr. Wu said he hadn't let his achievements go to his head. "When you've been through as many things and as many business negotiations, you will most likely be polished into a smooth character," Mr. Wu said, according to the transcript on Anbang's website. "But I do not seem that wise or worldly. I'm even a bit simple, as a child."

Write to Rick Carew at rick.carew@wsj.com and Ned Levin at ned.levin@wsj.com

(END) Dow Jones Newswires

March 28, 2016 18:55 ET (22:55 GMT)

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