HNA Group, a global Fortune 500 company focused on tourism, logistics, and financial services, has ranked No. 170 on the 2017 Global Fortune 500 list, rising 183 spots and making one of the biggest jumps on the list this year.
HNA’s financing practices have also stood out. Its latest annual report says the company is saddled with $73 billion of debt, which would the second-highest debt level for a nonfinancial corporation in China if HNA were to be listed, according to data compiled by Bloomberg.
Filings also show that HNA and its units have pledged at least $24 billion of shares across 15 publicly traded firms to finance its acquisitions, signaling a pattern of reliance on pledged assets that’s triggered concerns from credit-rating agencies and analysts.
Bank of America Corp, has told investment bankers to stop working on transactions with HNA Group for now amid growing concerns about the acquisitive Chinese conglomerate’s debt levels and ownership structure, according to people familiar with the matter.
Citigroup’s and Morgan Stanley’s internal committees have also struggled to get sufficient clarity on the source of funds and ownership structures at HNA, leading those banks to avoid deals for some time, the people said.
Still, some firms that shy away from the parent company are willing to do business with HNA units. Morgan Stanley was one of the banks that committed to a total $8.5 billion in financing for Avolon, a business owned by one of HNA’s listed arms, in its purchase of CIT Group Inc.’s airline leasing business last year.
Support from Western banks has helped fuel a debt-backed buying spree by HNA, as it expanded from its home base on China’s sunny Hainan island to add logistics, hotel and financial assets around the globe, including a $6.5 billion deal to buy a stake in Hilton Worldwide Holdings Inc. announced last year.
“HNA Group partners actively with many global investment banks and continues to do so,” the conglomerate said in an emailed statement. “We carefully select our financial advisers and financing sources on each transaction, based on specific capabilities and expertise, consistent with our commitment to global best practices.”
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