China Oceanwide Holdings continued its US acquisition spree by buying mortgage and life insurance firm Genworth Financial for $2.7 billion. The deal, which is subject to regulatory approval, will see the Beijing-based developer put up an additional $1.12 billion towards strengthening the Fortune 500 company’s life insurance business and addressing debt maturing in 2018.
For Oceanwide’s billionaire chairman Lu Zhiqiang, this move allows his conglomerate to hit two of his investment targets with a single deal — financial services and US-based assets. The developer currently has US real estate projects spanning from Hawaii to New York City.
Prior to the Genworth bid, Oceanwide’s expansion into finance had been confined to China, with the Hong Kong-listed firm having recently announced plans for a RMB 5 billion ($738 million) financial services unit. In July, Lu purchased nearly $1.1 billion worth of stock in China Minsheng Banking as part of Oceanwide’s strategy to become a player in the financial sector.
Genworth CEO Tom McInerney hailed Oceanwide as the ideal owner for the struggling firm, which has coped with losses on its long-term care coverage for years. It sold off a number of assets in the past 12 months, including a European mortgage insurance operation and a European lifestyle-protection unit, after it was shut out of the bond market.
Overseas Deals Reach Historic Proportions
Outbound spending by mainland firms reached record levels this year with everyone from ChemChina to Tencent getting in on the act. Oceanwide’s latest transaction pushes the total outbound investment figure past the $181 billion mark, which surpasses last year’s total by 70 percent.
Real estate has long been a popular asset for Chinese buyers with several notable deals taking place in October helping drive outbound investment numbers up even further. The most high profile deal was China Life acquiring a $2 billion stake in a portfolio of US hotels from Starwood Capital Group.
One of the insurer’s rivals, Anbang Insurance, was also busy this month reportedly purchasing $558 million worth of office properties in the Netherlands from Blackstone Group.
Oceanwide Looks Across the Pacific For Assets
While the acquisition of Genworth will allow Lu’s conglomerate to establish a financial services footprint in the US, it is already active in the country’s real estate market having completed deals for sites in Los Angeles, San Francisco and, most recently, Hawaii.
Colony Capital helped bring the mainland developer together with Kerzner International to develop a super-luxury Atlantis resort on the Hawaiian island of Oahu. The firm purchased two separate land plots on the island for $290 million.
In the past few years, Oceanwide also acquired a site in San Francisco’s Mission district for $296 million and also nabbed a pair of sites in Manhattan’s South Seaport area from the Howard Hughes Corporation for $390 million.
Its first US project, a $1 billion mixed-use development in Los Angeles, is currently under construction and scheduled to be completed in 2019. The mainland developer recently reached an agreement with Hyatt to build a luxury Park Hyatt hotel at the Oceanwide Plaza project that will also feature a condominium and a 700-foot LED display.