Anbang in the Lead to Acquire Seoul’s Yuanta Securities Building

THAAD? What THAAD? As relations between China and South Korea sour due to US missile installations and as capital controls continue to squeeze Chinese buyers, Anbang Insurance is said to be locked into exclusive negotiations to acquire an office building in central Seoul.

A Korean subsidiary of the mainland insurer best known for its $1.95 billion acquisition of New York’s Waldorf Astoria hotel in 2015, is now said by senior brokers active in the market to be in the final stages of a deal to purchase Seoul’s Yuanta Securities building from UBS Hana Asset Management.

Maeil Business News Korea cited investment bank sources which indicated Tongyang Asset Management, has offered US$6539 per square meters for the asset in Seoul’s Euljiro area, with the deal expected to close by the end of the month.

The building, currently occupied by Yuanta Securities, is expected to become the new headquarters for Tongyang Life Insurance, which Anbang acquired along with Tongyang Asset Management in 2015. Yuanta was formerly Tongyang Securities but was renamed following a scandal in which the company sold high-risk bonds prior to the financial collapse of five affiliates.

In addition to Tonyang, Anbang’s interests in Korea include the acquisition of Allianz Life Insurance Korea purchased from Germany’s Allianz in late 2016. The two insurance companies combined make Anbang boss Wu Xiaohui the fifth-largest player in Korea’s insurance market and provide the company with a platform for asset purchases in the Korean market.

Unfazed by THAAD and capital controls

Anbang’s purchase of the Yuanta Securities building is part of a larger trend in Chinese purchases in Seoul, largely in apartments in upscale residential areas. Chinese companies and individuals have had a growing appetite for Korean property over the last few years; a report from KB Financial Group earlier this year that Chinese ownership of Korean land increased 2.62 million square meters in 2016. Between 2011 and 2016, land owned by Chinese entities increased 486 percent.

China’s sovereign wealth fund has also recently become active in the Korean real estate market. In Novemeber, China Investment Corporation (CIC) teamed up with Canada’s Brookfield Asset Management to buy the International Finance Centre in Seoul for $2.7 billion in Korea’s biggest real estate transaction of 2016.

Missiles and Real Estate Deals

News of Anbang’s potential acquisition comes amid friction between Korea and China over Korea’s deployment of the US Terminal High Altitude Area Defense (THAAD) system.

Today saw the closing of Lotte Shanghai Foods, a joint venture between Hershey Co. and South Korea’s well-known Lotte supermarkets, the latest in a string of economic attacks from Beijing on Korean businesses. Targeted by Chinese regulators, a total of 55 out of 99 Lotte supermarkets were shuttered across China since the THAAD controversy has been ramped up, according to Yonhap News Agency, and LG Household & Health Care reported on Friday that Chinese authorities closed a factory in Hangzhou.