- Anthony Scaramucci will no longer sell his financial firm, SkyBridge Capital, to the Chinese conglomerate HNA.
- The deal was announced in late 2016.
- HNA has been having financial problems, selling bits of its stake in Deutsche Bank.
Dow Jones reports that Anthony Scaramucci, who spent 10 days as the White House Press Secretary, will no longer sell his financial firm SkyBridge Capital to Chinese conglomerate HNA in what was reportedly a $US180 million deal. He will return to SkyBridge as a co-managing partner.
This comes as HNA, a massive firm known as a “grey rhino” in China, has been forced to sell assets after a years-long buying spree.
Scaramucci’s firm is likely best known for the massive bash it used to throw in Las Vegas every year, one that attracts world leaders and stars of the world of finance for four days in the desert.
But of course that’s not the only business SkyBridge has. It is a fund of funds, which is to say that it is an investment fund that connects people (in this case well-off but not necessarily rich professionals like doctors and lawyers) to other investment funds.
Over the last few years, businesses like this have been hurting on Wall Street. When you pay a fund of funds, you pay a fee to them, and a fee to the hedge fund they’re connecting you to. The problem with that, of course, is that it’s expensive, and when hedge funds aren’t performing (as they haven’t been for the past couple of years) no one wants to pay high fees.
Scaramucci told me in an interview in 2016 that part of his job was to try to get fund managers to lower their fees so that he could lower fees for his clients. So when HNA said that it wanted to buy SkyBridge, knowing Scaramucci was in President Trump’s inner circle, eyebrows raised.
They raised even higher when reports of the sale price hit Wall Street – it seemed like HNA was overpaying for the firm.
Grey rhinos getting slaughtered
As time went on it became increasingly clear this deal was on life support. SkyBridge and HNA were forced to refile their application to a shadowy agency within the US Treasury – CFIUS,The Committee on Foreign Investment in the United States. It’s the nine-person panel that decides if a foreign company gets to buy a US company.
What’s more, HNA is in terrible shape. Deal after deal has left it cash poor and heavily in debt. Earlier this month, it sold off more of its stake in Deutche Bank. This is why President Xi Jinping refers to it as a “grey rhino” – a company that seems innocuous until it starts moving fast in your direction.
A few more things about HNA:
- The company claims to be owned by two charities,as well as its founders. Beyond that, the whole thing is murky.
- Chinese billionaire businessman Guo Wengui claims HNA is owned by Chinese government officials. He’s doing that from a self-imposed exile in New York City, and HNA is suing him for defamation.
- A bunch of Chinese banks reportedly cut off credit to HNA in an attempt to stop it from growing larger.HNA CEO Adam Tan told Reuters that wasn’t true, saying, “We’ve got nothing to hide.”
- There are reports here in the US of HNA buying businesses and then not maintaining them. This would support the thesis that the Chinese government is angry at these grey rhinos because it believes some acquisitions were just an attempt to get money out of China.
HNA’s problems continue to pile, and it continues to owe a long list of people money. Unfortunately for Scaramucci – he was clearly at the very bottom of that list.
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