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INVESTING/PORTFOLIO STRATEGIES

Deutsche Bank’s Chinese backer HNA becomes top shareholder

Chen Feng, chairman of HNA Group Co., which is now the biggest shareholder of Europe’s largest investment bank.

HNA Group Co., the Chinese aviation-to-hotels conglomerate, increased its stake in Deutsche Bank to almost 10% to become the top shareholder in Europe’s largest investment bank.

HNA’s holding in Germany’s biggest bank rose to 9.92%, according to a regulatory filing Tuesday by investment entities acting on HNA’s behalf. The conglomerate initially reported a 3% stake in Deutsche Bank in February, saying at the time that it may increase its holding, while intending to remain below 10%. It disclosed a stake of almost 4.8% in March.

Deutsche Bank CEO John Cryan is focusing his attention on returning the lender to growth after grappling with losses resulting from legal probes and misconduct charges. Last month, the bank sold €8 billion ($8.8 billion) of new shares to bolster capital after abandoning an earlier plan to sell its Postbank unit.

“An anchor investor is positive for Deutsche Bank at this juncture,” said Michael Huenseler, a fund manager at Assenagon Asset Management, which owns the bank’s stock. “The concentration of share holdings among larger investors is not a problem.”

Led by billionaire Chen Feng, HNA has been on a buying spree, acquiring stakes in Swiss duty-free operator Dufry AG, Singapore-based logistics provider CWT Ltd. and hotel operator Hilton Worldwide Holdings Inc. The Chinese firm was reported to have bid for HSH Nordbank, a regional bank in Germany, and earlier this year took a stake in asset manager SkyBridge Capital through HNA Capital, which has ambitions of becoming a global investment bank and financial services provider.

HNA’s voting rights in Deutsche Bank are formally held by a vehicle structured by Austrian asset manager C-Quadrat Investment. Alexander Schuetz, the CEO of C-Quadrat, has been nominated to join Deutsche Bank’s supervisory board after a confirmation vote of the bank’s annual general meeting on May 18.

Spokesmen for Deutsche Bank and C-Quadrat declined to comment.

HNA’s holding surpasses BlackRock’s 5.9% investment, which had been the largest single stake reported in Deutsche Bank, according to data compiled by Bloomberg.

Another of the bank’s key shareholders, former Qatari Prime Minister Sheikh Hamad bin Jassim bin Jabr Al Thani, used a margin loan of about $1 billion to fund his participation in the lender’s rights offer, people familiar with the matter said last month. Mr. Hamad bin Jassim and the former emir of the country, Sheikh Hamad bin Khalifa Al Thani, have a combined stake of about 10% in Deutsche Bank, a level which they currently plan to maintain, the people said.

Deutsche Bank fell 0.3% to €16.63 at 11:04 a.m. in Frankfurt trading on Wednesday. It has gained 8% this year and is up 77% from a low reached in September.