×

China Probes Finances of Wanda, Fosun (Reports)

The China Banking Regulatory Commission is reported to be looking into how some of China’s most acquisitive companies raised financing. Companies reportedly include Dalian Wanda, Fosun International and Rossoneri Sports Investment, a Chinese company which recently acquired the Italian soccer team AC Milan.

Reports of the investigation surfaced in China’s financial publication Caixin, with further details from other outlets with access to news on China’s state financial system. Other companies include airlines to property giant HNA, and freewheeling insurance group Anbang. The billionaire chairman of Anbang, Wu Xiaohui, was recently detained by security forces and is currently prevented from leaving China.

On Thursday, there was sharp sell-off of Wanda’s and Fosun’s shares and commercial debt. The shares of both dropped dramatically, though both companies issued statements attempting to reassure investors that business was continuing as normal and that they knew of no issue that required a regulatory alert.

The surge of share trading on Thursday appears to have been triggered by rumors that state-controlled banks had been ordered to sell down their holdings in the companies. The emergence of the banking probe now appears more likely to be the reason for the investor nerves.

According to Chinese financial media, the CBRC is interested in the scale and source of the companies’ debt financing, rather than any specific wrongdoing. Chinese companies and local governments have amassed massive amounts of debt, with much of it coming from off balance sheet vehicles and non-state sources. Anbang in particular is believed to have made extensive use of the so-called shadow banking system.

The companies targeted are also among the busiest in China in overseas mergers and acquisition activity. Outside China, Wanda has acquired AMC, Carmike, Odeon UCI Legendary Entertainment, Infront Sports, World Triathlon, and yacht maker Sunseeker. Fosun has stakes in Jeff Robinov’s Studio 8, Cirque du Soleil, travel giant Club Med and English soccer club Wolverhampton Wanderers.

The regulatory moves follow the announcement last November of capital controls by a separate regulator. Those were aimed at limiting the massive flow of capital out of China in 2016, stimulated by the weakening of the Chinese currency. The currency controls appear to have stymied Wanda’s proposed $1 billion takeover of U.S. TV producer Dick Clark Productions. Other deals that were called off also blamed China’s official brakes on capital export.

China’s currency has since stabilized and national financial reserves have begun expanding again since February. That would point to a quick victory for the policymakers at the macro economic level. But the fear remains that some companies have over-leveraged themselves in their headlong charge for growth.

The new probe is understood to require ICBC, China Construction Bank, Bank of Communications and Guangfa Bank, among others, to look at their credit exposure and conduct a risk assessment.

HNA, parent of the Hainan Airlines operator, has spent billions buying overseas assets that include the Reuters headquarters building in London, U.S. golf courses, a stake in Deutsche Bank, and 25% of the Hilton Hotels group.

By lunchtime Friday, the shares of both Fosun and Wanda Film appeared to have stabilized. Fosun International was down 0.3 at HK$11.7, while Wanda Film was up 0.4% at RMB52.13.

More Film

  • Pinewood Studios James Bond

    Netflix's Shepperton Studios Deal Is Stretching the U.K.'s Production Limits

    Netflix’s huge new hub at Shepperton Studios outside London is a further fillip for Britain’s booming production sector. Amid jitters over Brexit and its effects on the economy, the streaming giant’s commitment is a vote of confidence in the U.K. entertainment industry and a continuing source of local jobs. But the decision by Netflix to [...]

  • Bottom of the 9th

    Film Review: ‘Bottom of the 9th’

    Nearly two decades after scoring an audience award at Sundance for “Two Family House,” a smartly understated yet deeply affecting indie about a Staten Island factory worker who deeply regrets stifling his showbiz ambitions, director Raymond De Felitta steps back up to the plate with “Bottom of the 9th,” another dramatically solid and emotionally satisfying [...]

  • THE BRIDGE - "Calaca" - Episode

    Endemol Shine Builds ‘The Bridge’ in Africa (EXCLUSIVE)

    DURBAN–Endemol Shine Group has sold the rights to adapt its critically acclaimed and highly popular Nordic Noir detective series “The Bridge” to Cape Town-based production company Both Worlds Pictures, Variety has learned exclusively. The series will feature an all-African cast and will be set around the Beit Bridge border crossing between South Africa and Zimbabwe. Originally known [...]

  • Durban Film Fest 2019

    Durban Fest Hails Film as ‘Conscience of Our Nation’

    DURBAN–When Ros and Teddy Sarkin raised the curtain on the first Durban Intl. Film Festival 40 years ago, the odds were long that their scrappy fest would survive its inaugural edition. The apartheid government and its draconian censorship board had a stranglehold on the films that reached South African theaters, banning the sorts of subversive [...]

  • Tiny: The Life of Erin Blackwell

    Film Review: 'Tiny: The Life of Erin Blackwell'

    “Streetwise,”  the classic and haunting 1984 documentary about homeless street kids in Seattle, is a movie that’s now 35 years old. But for anyone who has seen it, the children it’s about — drifters, hustlers, squatters, thieves, prostitutes — remain frozen in time. And none of them was ever more memorable than Tiny, the 14-year-old [...]

  • Animation Studio Fire

    Revenge May Have Been Motive for Kyoto Animation Arson Attack

    Revenge for allegedly stolen ideas is emerging as a possible motive for the devastating arson attack on Kyoto Animation in Japan, which killed 33 people. Investigative sources quoted by Japan’s Jiji Press said Friday that the suspected arsonist, who is in custody, had a grudge against the studio. “Since [the studio] stole my novel, I [...]

  • Terminator: Dark Fate Gabriel Luna

    'Terminator: Dark Fate' Cast Proud of Latinx Representation in Latest Installment

    The stars of the Tim Miller-directed “Terminator: Dark Fate” stormed the stage of San Diego Comic-Con’s Hall H on Thursday, but it wasn’t until after the panel — which included appearances from Arnold Schwarzenegger and Linda Hamilton — that Natalia Reyes, Gabriel Luna and Diego Boneta reflected on what makes the upcoming installment in the [...]

More From Our Brands

Access exclusive content