A person walks into a Sheraton Hotel in downtown Brooklyn in New York City on March 14, 2016. Sheraton is one of the key brands of the Starwood hotel chain. (Photo : Getty Images)
China’s Anbang Insurance Group on Tuesday said that it is well within the rules with its increased offer of $14 billion for Starwood Hotels & Resorts Worldwide, beating the latest bid from hotel chain Marriott International.
The proposed investment conforms to government rules and regulations and Anbang has an ample investment quota for this year, a spokesman from Anbang said in a statement.
Chinese financial magazine Caixing earlier reported than the China Insurance Regulatory Commission, the country's industry watchdog, may not approve Anbang's deals on the basis that it violates a rule forbidding local insurance companies from investing more than 15 percent of their total assets abroad.
Anbang has already spent more than 171.6 billion yuan ($26.4 billion) in investments, including bids to acquire Starwood and Strategic Hotels & Resorts, according to Caixin. The company is estimated to have less than 1 trillion yuan in total insurance assets as of 2015.
Several experts, however, have expressed confidence that Anbang has yet to exceed its overseas investment quota and can benefit from China's policies encouraging investment abroad.
Hao Yansu, director of the School of Insurance at the Central University of Finance and Economics in Beijing, told China Daily that while the rules prohibit Anbang from investing more than 15 percent of its total assets overseas, it does not cover its total insurance assets.
Anbang's total assets are estimated to be more 1.9 trillion yuan, which allows the company to make overseas investments of up to 285 billion yuan, said China Daily.
Gui Jieying, an analyst with Zero2IPO Group, said that Anbang has aggressively pursued foreign investments since 2014, when Beijing issued a guideline that improved the capabilities of Chinese investment companies and encouraged them to invest abroad.
"China is relaxing rules on insurance companies' investment, and Anbang is a market leader," Gui added.
Several of Anbang's recent high-profile investments include the Waldorf Astoria Hotel in New York, U.S. life insurance provider Fidelity and Guaranty Life, Belgium's Fidea Assurances and Delta Lloyd Bank, and Dutch insurance company VIVAT. The company also bought a controlling stake in South Korea's Tong Yang Life.
All these investments "can help Anbang to set up a global insurance business network and stabilize returns," Gui said.
In a report from real estate consultancy company JLL published in October the previous year, China's outbound real estate investment skyrocketed by 50 percent to $15.6 billion a year to date, thanks to growing interest in insurers to increase the allocation of their real estate assets.
Last week, Marriott increased its offer to purchase Starwood at $13.6 billion, topping Anbang's previous bid of $13.2 billion. In a statement, Marriott said it was "committed" to completing its deal with Starwood but has declined to increase its current offer.
