VERY CHARITABLE

The complex ownership of the Chinese firm trying to buy the Mooch’s hedge fund

Good luck with that.
Good luck with that.
Image: AP Photo/Pablo Martinez Monsivais
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Back in January, flamboyant Wall Street financier Anthony Scaramucci, aka the Mooch, was set to join Donald Trump’s White House as a senior advisor, but the position was later retracted amid concerns over his sale of his hedge fund, SkyBridge Capital, to a subsidiary of HNA Group, a Chinese conglomerate with deep ties to the country’s ruling Communist Party.

Now Scaramucci is back in the spotlight after being appointed White House communications chief last week. So is his secretive Chinese would-be business partner.

On Monday (July 24), HNA disclosed a 29.5% ownership stake (paywall) in the group has moved from a mysterious Chinese investor to a newly founded US-based charity, as the conglomerate faces increasing scrutiny over its aggressive overseas investments. The Hainan Cihang Charity Foundation, whose office address is in Midtown Manhattan, was registered in December, according to New York state records.

Under the ownership reshuffle, the New York-registered nonprofit has become the single biggest shareholder of HNA, followed by Hainan Province Cihang Foundation, a Chinese-registered nonprofit, which holds a 22.75% stake, according to a company statement viewed by Quartz. The remainder of the group is held by a dozen HNA executives and Hainan Airlines Holding, HNA’s core airline division.

HNA, based in the southern Hainan province, is one of China’s most high-profile overseas dealmakers, having invested $50 billion in stakes in foreign travel and financial assets including Hilton Hotels, Deutsche Bank, Portugal’s TAP airline, and airport ground services company Swissport in the past two years. Scaramucci’s sale of SkyBridge to HNA is still pending US regulatory approval, according to recent reports from Reuters and Forbes, which cited unidentified sources familiar with the matter. Forbes estimated Scaramucci could make up to $77 million from the deal, which was initiated in order to clear the way for his previous job with the White House.

Amid wider concerns about capital outflows, the Chinese government has recently urged banks to take a closer look at Chinese firms that carried out massive overseas deals in recent years, like HNA. In response, three Chinese banks have reportedly decided to stop extending new loans to HNA. Abroad, Bank of America has also halted deals with HNA for now amid concerns about the company’s $73 billion debt and murky ownership structure.

Monday’s statement is HNA’s most detailed disclosure about its ownership. Previous corporate filings showed that a Chinese businessman named Guan Jun owned a 29.5% stake in the group via two holding companies. HNA said Guan recently donated his stake to Cihang, the New York-based charity.

“Guan Jun has witnessed HNA Group’s development and has got in touch with HNA’s founding team members. He trusts us very much,” a HNA spokesman said in an email explaining why Guan gave away his shares in the company. The spokesman didn’t address other queries about Guan.

Tan said in the interview with Reuters that he was unclear about a timeline to close the buyout of SkyBridge, adding the US’s regulatory process may take more than a few weeks. Tan also shrugged away concerns about the Chinese government’s scrutiny on HNA. “We have nothing to hide,” he said.

In an interview with the New York Times (paywall) in January, Scaramucci dismissed the idea that HNA was seeking a friend in the Trump administration through the deal. “If people are saying that HNA is trying to buy access, then people are saying HNA is stupid,” he said.

This article has been updated July 25 with comment from HNA Group.