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| Starwood Bidder Is a Reclusive Chinese Insurer With Opaque Backing | |
| (about 9 hours later) | |
| He is often compared in the media to Warren E. Buffett. Like the American billionaire, he is leveraging his control of an insurance company to become one of the biggest names in global finance. Like Mr. Buffett, he looks to be acquiring an immense personal fortune. | He is often compared in the media to Warren E. Buffett. Like the American billionaire, he is leveraging his control of an insurance company to become one of the biggest names in global finance. Like Mr. Buffett, he looks to be acquiring an immense personal fortune. |
| But that is where the comparisons between Wu Xiaohui, the chairman of the Anbang Insurance Group of China, and Mr. Buffett come to a halt. | But that is where the comparisons between Wu Xiaohui, the chairman of the Anbang Insurance Group of China, and Mr. Buffett come to a halt. |
| Mr. Buffett is a public figure who built his fortune over decades. Mr. Wu avoids interviews. The fax number on his company’s website connects to a dentist’s office. And, unlike Mr. Buffett, whose net worth can be easily calculated, Mr. Wu’s fortune is a cipher, lost in Anbang’s labyrinthine shareholding structure made up of 37 interlocking holding companies. | Mr. Buffett is a public figure who built his fortune over decades. Mr. Wu avoids interviews. The fax number on his company’s website connects to a dentist’s office. And, unlike Mr. Buffett, whose net worth can be easily calculated, Mr. Wu’s fortune is a cipher, lost in Anbang’s labyrinthine shareholding structure made up of 37 interlocking holding companies. |
| At a time of growing demands for transparency in business and finance, some experts say it is striking that an opaque Chinese insurer is forging headline-grabbing deals in the United States, especially in an election year that has put China’s economic influence under scrutiny as never before. | At a time of growing demands for transparency in business and finance, some experts say it is striking that an opaque Chinese insurer is forging headline-grabbing deals in the United States, especially in an election year that has put China’s economic influence under scrutiny as never before. |
| Mr. Wu’s company, which says it has assets of more than $291 billion, is now in an intense bidding war with Marriott International for control of Starwood Hotels & Resorts. On Monday, Anbang raised its offer to $14 billion. Earlier this month, Anbang agreed to pay $6.5 billion to the Blackstone Group for a portfolio of luxury hotels such as the Essex House in New York. In late 2014, Anbang bought the Waldorf Astoria hotel in New York for almost $2 billion. | Mr. Wu’s company, which says it has assets of more than $291 billion, is now in an intense bidding war with Marriott International for control of Starwood Hotels & Resorts. On Monday, Anbang raised its offer to $14 billion. Earlier this month, Anbang agreed to pay $6.5 billion to the Blackstone Group for a portfolio of luxury hotels such as the Essex House in New York. In late 2014, Anbang bought the Waldorf Astoria hotel in New York for almost $2 billion. |
| Anbang, founded only in 2004, exploded in size two years ago, as those same 37 companies poured billions of dollars into its coffers. | Anbang, founded only in 2004, exploded in size two years ago, as those same 37 companies poured billions of dollars into its coffers. |
| “Any time somebody in China magically snaps their fingers and has a lot of money, in this case a colossal amount of money, that sets off red flags for me,” said Christopher Balding, associate professor of finance and economics at Peking University’s campus in Shenzhen, a city in southern China. “It’s in their interest to share information to say ‘we come in peace,’ but there’s just not that culture of information-sharing. In China, when people are hiding this amount of information, it’s for a reason.” | “Any time somebody in China magically snaps their fingers and has a lot of money, in this case a colossal amount of money, that sets off red flags for me,” said Christopher Balding, associate professor of finance and economics at Peking University’s campus in Shenzhen, a city in southern China. “It’s in their interest to share information to say ‘we come in peace,’ but there’s just not that culture of information-sharing. In China, when people are hiding this amount of information, it’s for a reason.” |
| Mr. Wu has links to some of the most powerful families in China. He married Zhuo Ran, the granddaughter of Deng Xiaoping, China’s former paramount leader in the 1980s and much of the 1990s. That name, uncommon in Chinese, appears in corporate records tied to at least two of the 37 holding companies. | |
| An Anbang director, Chen Xiaolu, is the son of a famous military commander who fought alongside Mao Zedong. Mr. Chen’s name has appeared as a top officer in at least four of the Anbang companies, according to a review of records filed online with Chinese officials. In 2014, the name of Levin Zhu, the son of former Premier Zhu Rongji, also showed up on Anbang’s list of directors. | An Anbang director, Chen Xiaolu, is the son of a famous military commander who fought alongside Mao Zedong. Mr. Chen’s name has appeared as a top officer in at least four of the Anbang companies, according to a review of records filed online with Chinese officials. In 2014, the name of Levin Zhu, the son of former Premier Zhu Rongji, also showed up on Anbang’s list of directors. |
| Mr. Chen has said he does not own Anbang shares. Mr. Zhu told local media last week that he never agreed to be on Anbang’s board. Neither could be reached for comment. | Mr. Chen has said he does not own Anbang shares. Mr. Zhu told local media last week that he never agreed to be on Anbang’s board. Neither could be reached for comment. |
| Anbang joins a well-worn path used by Chinese companies that entered the global financial system with ties to China’s political elite. Among that group is Ping An Insurance, a vehicle of immense wealth for relatives of former Premier Wen Jiabao, and Dalian Wanda Commercial Properties, invested in by relatives or business associates of at least four former or current members of the Communist Party’s ruling Politburo, including the older sister of President Xi Jinping. | Anbang joins a well-worn path used by Chinese companies that entered the global financial system with ties to China’s political elite. Among that group is Ping An Insurance, a vehicle of immense wealth for relatives of former Premier Wen Jiabao, and Dalian Wanda Commercial Properties, invested in by relatives or business associates of at least four former or current members of the Communist Party’s ruling Politburo, including the older sister of President Xi Jinping. |
| Calls to Anbang’s listed phone number were not answered. Nobody replied to a list of questions delivered to its Beijing headquarters, with its enormous lobby — the size of several basketball courts — and its large chandelier. An Anbang employee said the company did not answer media questions. | Calls to Anbang’s listed phone number were not answered. Nobody replied to a list of questions delivered to its Beijing headquarters, with its enormous lobby — the size of several basketball courts — and its large chandelier. An Anbang employee said the company did not answer media questions. |
| Mr. Wu, 49, a native of the city of Wenzhou in eastern China’s Zhejiang province, in rare public appearances talks of Anbang’s ability to generate high returns from the companies it takes over and the benefits to its corporate culture of globalization. | Mr. Wu, 49, a native of the city of Wenzhou in eastern China’s Zhejiang province, in rare public appearances talks of Anbang’s ability to generate high returns from the companies it takes over and the benefits to its corporate culture of globalization. |
| “For instance, if you choose to stay in rural villages, you can only meet common village girls; yet if you come to Paris, you will have the chance to lay your eyes on the Mona Lisa,” Mr. Wu told Harvard University students early last year. | “For instance, if you choose to stay in rural villages, you can only meet common village girls; yet if you come to Paris, you will have the chance to lay your eyes on the Mona Lisa,” Mr. Wu told Harvard University students early last year. |
| His exact holdings in Anbang are not clear. A close examination of Anbang’s shareholding structure shows that the 37 companies control more than 93 percent of Anbang, while two Chinese state-owned companies own the rest. The 37 shareholders are linked by common phone numbers, email addresses and interlocking ownership, according to company records filed with the Chinese government and available online. | His exact holdings in Anbang are not clear. A close examination of Anbang’s shareholding structure shows that the 37 companies control more than 93 percent of Anbang, while two Chinese state-owned companies own the rest. The 37 shareholders are linked by common phone numbers, email addresses and interlocking ownership, according to company records filed with the Chinese government and available online. |
| For example, one Anbang shareholder — a coal mining company in China’s western region of Xinjiang — is owned by another mining company, Zhongya Huajin, that listed a Zhuo Ran as its first legal representative, though that person has since resigned. | For example, one Anbang shareholder — a coal mining company in China’s western region of Xinjiang — is owned by another mining company, Zhongya Huajin, that listed a Zhuo Ran as its first legal representative, though that person has since resigned. |
| Zhongya Huajin shares an official website address with a different Anbang shareholder, a Beijing real estate company. Collectively, those companies own nearly 4.6 billion shares of Anbang, or more than 7 percent. The companies could not be reached for comment, and their common website now contains only links to pornography and gambling services. | Zhongya Huajin shares an official website address with a different Anbang shareholder, a Beijing real estate company. Collectively, those companies own nearly 4.6 billion shares of Anbang, or more than 7 percent. The companies could not be reached for comment, and their common website now contains only links to pornography and gambling services. |
| Five shareholders list the same legal email address in government filings. Phones at those companies rang unanswered, and a message to that address was not returned. | Five shareholders list the same legal email address in government filings. Phones at those companies rang unanswered, and a message to that address was not returned. |
| The companies injected billions of dollars in capital into Anbang in 2014, its documents show, increasing its registered capital fivefold from 2011 levels and making it bigger than any other Chinese insurance company. “Warren Buffett got wealthy by growing a small insurance company into a behemoth,” Mr. Balding said. “This is the exact opposite of that.” | The companies injected billions of dollars in capital into Anbang in 2014, its documents show, increasing its registered capital fivefold from 2011 levels and making it bigger than any other Chinese insurance company. “Warren Buffett got wealthy by growing a small insurance company into a behemoth,” Mr. Balding said. “This is the exact opposite of that.” |
| Collectively, the group of 37 companies controls enough of Anbang to make any one person one of China’s wealthiest individuals. Mr. Wu is not listed in the documents as a major shareholder, and he does not appear on wealth-tracking lists compiled by media companies. | Collectively, the group of 37 companies controls enough of Anbang to make any one person one of China’s wealthiest individuals. Mr. Wu is not listed in the documents as a major shareholder, and he does not appear on wealth-tracking lists compiled by media companies. |
| A Chinese media report last year identified two people listed as directors or shareholders in six of the 37 companies as Mr. Wu’s siblings. The report, by the Southern Weekend newspaper, was later removed from its website. Southern Weekend issued an apology to Anbang, stating that there were “inaccuracies” in the article, without specifying what they were. | A Chinese media report last year identified two people listed as directors or shareholders in six of the 37 companies as Mr. Wu’s siblings. The report, by the Southern Weekend newspaper, was later removed from its website. Southern Weekend issued an apology to Anbang, stating that there were “inaccuracies” in the article, without specifying what they were. |
| Chang Ping, a former editor in chief of the paper who was not employed by Southern Weekend at the time, said that the apology had been made “under pressure” for political reasons. | Chang Ping, a former editor in chief of the paper who was not employed by Southern Weekend at the time, said that the apology had been made “under pressure” for political reasons. |