China state executives take key executive roles at HNA
Two senior state executives have been appointed to key management roles at HNA Group, as the heavily indebted Chinese conglomerate said it needed government help to manage “intensifying liquidity risks” resulting from the coronavirus epidemic.
HNA is based in southern Hainan province and controls Hainan Airlines, China’s fourth-largest carrier.
HNA was one of four privately held conglomerates behind a record surge in Chinese outbound investment in 2015-2016, only to be reined in by government officials worried about the financial risks the four groups were taking.
In 2018 insurer Anbang became the first of these so-called “grey rhinos”, which also included Fosun and Wanda, to be taken over by the state after the arrest of its founder, Wu Xiaohui.
The new appointments at HNA, announced by the group on Saturday, will increase speculation about whether it is also about to be formally taken over or bailed out by the Chinese central government or Hainan province.
HNA said it was appointing a new executive chairman, Gu Gang, and a co-chief executive, Ren Qinghua, while also establishing a new government-led committee to “advance the group’s risk management work”.
HNA said it had been working to “save itself” for more than two years, but “had not been able to completely resolve its risks” and now faced an even more difficult situation because of the epidemic.
Mr Gu and Mr Ren are senior executives at state-owned development companies controlled by the Hainan provincial government. According to the announcement, they will serve alongside HNA chairman Chen Feng and chief executive Adam Tan.
Mr Gu and Mr Ren will also lead HNA’s new risk management committee, whose members include a senior representative from China Development Bank. CDB is China’s largest state policy bank and one of HNA’s largest creditors.
On Saturday the National Bureau of Statistics announced that its manufacturing purchasing managers’ index had fallen to a record low in February.
It was the first in a series of official economic indicators that are expected to show the devastating economic effect of the epidemic, which erupted out of central Hubei province in mid-January.
For many years HNA’s murky shareholding structure stoked speculation about whether the group really was privately held.
While the group’s two founders each held stakes of 15 per cent, another 29.5 per cent appeared to be controlled by a mystery shareholder.
Three years ago Mr Tan told the Financial Times that the unknown shareholder “had just held the stake for us”, which was then transferred to a charitable foundation. Two charitable foundations now hold more than 57 per cent of HNA’s shares.