The New Zealand finance world was surprised to learn that one of their biggest companies will be sold to a Chinese conglomerate. The Chinese HNA Group has finalized a deal with ANZ New Zealand to buy their subsidiary, UDC Finance Limited. UDC Finance was sold for a price of $660 million, and it will continue to be independently operated. Both HNA and ANZ express enjoyment about the results of the financial deal.
HNA Group From China Buys UDC Finance for $660 Million
UDC Finance Limited is one of the biggest finance companies in the world, and they previously functioned as an independently operated subsidiary of the ANZ Bank New Zealand. The business has been very popular among New Zealanders since it first started in 1938. Though UDC primarily offers asset-backed financing, they also provide investment opportunities for consumers.
HNA Group is a Chinese conglomerate that owns many aviation, finance, real estate, and tourism companies, but it has not managed to acquire any New Zealand based companies until now. The sale of UDC Finance may mark the beginning of a greater relationship between New Zealand and Chinese finance companies.
Though HNA started out as a small airline in China, wise choices allowed them to end up owning several different companies. HNA has previously been involved with some smaller finance companies, but this sale is a huge opportunity for them. It will allow HNA to greatly expand its market, particularly in the New Zealand Region.
ANZ had been looking to sell UDC Finance for roughly a year, but they were having trouble because UDC’s credit rating was downgraded to an AA- due to the potential change in ownership. Rumored buyers included Heartland Bank and many other finance and business groups. Eventually HNA was able to out-negotiate other possible buyers.
The final price of the sale will be $660 million, and ANZ says that this will provide them with a net gain of $100 million. Since UDC’s total net assets are just $435 million, the price to book ratio will be an impressive 1.6 times. It seems that HNA was willing to pay more because it wanted to get a start in the New Zealand market, and HNA chief executive Adam Tan is enthusiastic about the “significant growth opportunities in Australasia and supports HNA Group’s disciplined approach to our core tourism, logistics and financial services businesses.”
Financial experts say that this was a very wise move for ANZ because it will now have a stronger capital position compared to rivals. Most of ANZ’s core markets rely on retail and commercial banking, so the asset financing of UDC was slightly irrelevant to the majority of ANZ’s financial goals.
Some UDC Finance customers are slightly concerned by the Chinese takeover, but the CEO of ANZ New Zealand is confident that the transition will go smoothly. CEO David Hisco says,
HNA is well placed to invest in specialist asset finance products and systems which will help UDC expand further in the future.
The sale may represent a change, but it is not likely to disrupt daily proceedings.
The Results of This Financial Deal
The sale of UDC Finance is still undergoing some approvals, so it will not be completed until late 2017. The HNA Group has plans to keep the independent operating structure and retain all current staff and customers. People who use UDC Finance can most likely expect a calm transition in ownership that will not affect them. The deal also gives HNA Group a valuable foothold in the finance industry while providing ANZ with some much-needed capital.