Sale of Canada's InnVest raises questions tied to Anbang


China's Anbang Insurance Group can't seem to stay out of the spotlight. Even when it's seemingly not under it.

The Waldorf Astoria winner, Starwood loser, but Strategic buyer has been quiet since news broke of the last deal. Or has it been?

The Plot Unfolds

Last week, InnVest Real Estate Investment Trust, which has a portfolio of 109 hotels in Canada, was acquired by Bluesky Hotels & Resorts, a Canadian company with Hong Kong backers, for $1.6 billion, including debt. At the time, reports compared the purchase to Anbang's $6.5-billion acquisition of Strategic Hotels and Resorts and abandoned $14-billion bid for the Starwood hotel chain.

Turns out, there may be very good reasons for the similarities. Reports now suggest that Bluesky may, in fact, tie back to Anbang. There's at least a tenuous connection.

Bluesky Hotels and Resorts, a Canada-based shell company backed by unnamed Hong Kong investors, was incorporated on April 18, less than a month before the InnVest acquisition. Its directors are Xing Zhang and Li Chen, according to the Canadian corporate registry. 

Right around the time Anbang's Starwood bid fell through, the insurance company began talks to buy InnVest's portfolio. And just as with the Starwood deal, after weeks of negotiations, the Anbang team, led by Beijing-based executive Lydia Chen, spent weeks negotiating, then suddenly withdrew. 

Chen then reportedly told InnVest that Bluesky was interested in purchasing the portfolio. According to sources, Bluesky's Li Chen and Anbang's Lydia Chen are the same person. If so, and if the unnamed Hong Kong investors include Anbang power, this would explain the secrecy behind Bluesky's formation, and why those investors have remained anonymous thus far.

One anonymous source claimed that Chen was an Anbang employee who moved to Bluesky after Anbang introduced Bluesky to the deal, and then threatened to end the proceedings if the connection was revealed. An Anbang spokesperson has denied any connection to Bluesky. 

InnVest's shareholders are scheduled to vote on the deal at InnVest’s annual meeting on June 28. Investors representing about 29 percent of outstanding stock, including KingSett and Orange Capital LLC, have already agreed to the purchase.

Sources: Wall Street Journal, Bloomberg