China HNA, SkyBridge Capital to drop deal as Scaramucci plans return

Signage for HNA Group Co. is displayed atop the company's building in Beijing, China, on Thursday, Feb. 1, 2018. Photographer: Giulia Marchi/Bloomberg

HNA Group Co. and SkyBridge Capital have mutually agreed to drop the Chinese conglomerate’s plan to acquire the investment firm and founder Anthony Scaramucci will return as a co-managing partner.

The companies are exploring a relationship to distribute SkyBridge products in China, according to a person familiar with the matter, who declined to be named because the information is private. Both sides agreed that U.S. government approval would take too long.

Scaramucci, the former White House communications director, will focus on strategic planning and marketing. An HNA spokesman said the company hasn’t made any announcement. A SkyBridge spokeswoman declined to comment.

HNA and Scaramucci were awaiting a decision from the government panel that reviews foreign acquisitions of American businesses. The panel, which examines whether transactions may pose a national security risk, told the companies extra steps were needed to proceed with the deal, the person said.

The Trump administration has increased scrutiny of Chinese buyers amid trade tensions between the two countries. That’s led to a string of takeovers that have collapsed over national security threats.

CFIUS Review

The Committee on Foreign Investment in the U.S., an interagency panel led by the Treasury Department, began its formal review of the proposed acquisition in February. The committee has frustrated a number of takeovers since Trump took office, most notably Broadcom Ltd.’s hostile takeover of chipmaker Qualcomm Inc., which Trump blocked in March.

CFIUS doesn’t disclose or comment on its reviews.

Dow Jones earlier reported on Monday that HNA was planning to drop the deal.

The transaction, which valued the fund of hedge funds firm at $180 million or more, was first announced in January 2017. Scaramucci, then best known for throwing lavish hedge-fund industry conferences in Las Vegas, was looking to sell his share in order to take a position in the Trump administration. A subsidiary of HNA agreed to purchase a majority stake in the firm, while a little-known investment company called RON Transatlantic would increase its share.

Analysts said the deal, which valued SkyBridge at more than 7 times EBITDA, or earnings before interest, tax, depreciation and amortization, was high for a fund-of-funds manager. Funds of funds have fallen out of favor in recent years for adding an extra layer of fees to already pricey hedge-fund investments.

Though the initial position for which Scaramucci sold his stake never materialized, the hedge fund impresario ultimately spent an eventful 10 days as Trump’s communications director in July, before being fired by incoming White House Chief of Staff John Kelly.

Bloomberg

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.