CALGARY – The Chinese government has seized control of Anbang Insurance Group, which is the largest owner of retirement homes in British Columbia, following an investigation of the insurer’s former chairman.
The China Insurance Regulatory Commission announced Friday the takeover of Anbang, a Beijing-based private insurer with real-estate assets around the world, citing the company’s “illegal business practices” and the prosecution of its former chairman Wu Xiaohui.
Last February, Anbang purchased Vancouver-based Retirement Concepts, which owns seniors facilities in B.C. and Alberta, for an estimated $1 billion following both provincial and federal government reviews of the transaction.
“In our discussions with Anbang we understand that there will not be any staffing changes outside of China as a result of this decision,” Pacific Reach Properties president and CEO Azim Jamal said in an email. Pacific Reach manages the Retirement Concepts properties.
“We anticipate that it will be business as usual for Retirement Concepts,” Jamal said, adding that his “working relationship with Anbang leadership in Canada has been excellent.”
But not everybody is convinced.
“These aren’t just regular transactions of some (real estate investment trust),” Conservative MP and foreign affairs critic Erin O’Toole said, adding the opposition was concerned about the potential for Chinese officials to takeover of Anbang last year. “This is an arm of the Chinese state,” he said.
“When the Anbang house of cards finally collapses, who will gain control of these senior care facilities in B.C.?” Conservative MP Mark Strahl asked in the House of Commons last year following the confirmation that Wu had been detained by Chinese authorities.
“Are seniors about to find out that their landlord is actually the People’s Republic of China?” he asked.
Prime Minister Justin Trudeau responded at the time that the retirement homes would continue to be regulated by B.C. “ensuring the rules for the care of seniors continue to be followed.”
China’s state-controlled Xinhua News agency reported that Anbang would remain a private insurer but added there would be a “shareholder restructuring” as the insurance regulator, the People’s Bank of China and other government entities take control of the company for the next year.
The agency also reported that public prosecutors in Shanghai were charging Wu with fraud and embezzlement.
Minister of Innovation, Science and Economic Development Navdeep Bains, who oversees the ministry that approved the sale, did not respond to a request for comment.
Anbang has been an aggressive purchaser of properties around the world in recent years, buying up New York’s Waldorf Astoria hotel for US$2 billion in 2014. The company also spent US$6 billion in 2016 buying up other hotels in the U.S.
China’s government has sought to clamp down on capital leaving the country and the China Securities Regulatory Commission has specifically singled out big-spending insurance companies.
Even with that warning, the seizure of a major non-state company is unprecedented and underscores how far the ruling Communist Party will go in its growing campaign to lower financial risks, sending a signal to risk-taking private enterprises.
Anbang also has significant stakes in a slew of major Chinese companies, such as banks and property developers.
China Minsheng Banking Corp. Ltd., China Merchants Bank Co. Ltd., developers China Vanke Co. Ltd. and Gemdale Corp. said they received notices from Anbang on Friday assuring them that there would be no immediate stake sales.
“Currently, operations at Anbang Insurance Group and its units are operating normally with abundant cash reserves. There are no plans to sell shares in your company,” the companies quoted Anbang as saying in similar filings to the Shanghai and Shenzhen stock exchanges.
If the government takeover did lead to asset sales, analysts in Canada believe there would be significant interest in the Retirement Concepts properties.
“If Anbang undergoes some dispositions and the Retirement Concepts portfolio is either sold in pieces or sold as a whole, then I would imagine these public entities would take an interest,” said Canaccord Genuity director, research Jenny Ma, who covers Canadian real-estate investment trusts.
She said Mississauga, Ont.-based Chartwell Retirement Residences and Markaham, Ont.-based Sienna Senior Living Inc. would both likely be buyers for the properties, if there was an inclination to sell.
“Those two entities have been very acquisitive as of late,” Ma said.
Financial Post with files from Reuters
• Email: [email protected] | Twitter: geoffreymorgan