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Hedge Funds

China’s HNA walks away from planned SkyBridge acquisition

HNA Capital on Monday backed away from the Hainan-based firm's planned purchase of a majority stake in SkyBridge Capital, in favor of exploring opportunities to market and distribute the New York-based hedge funds-of-funds firm's strategies in China.

HNA and SkyBridge said in a joint announcement that they've mutually agreed not to pursue the transaction the firms outlined in January 2017 that saw HNA Capital and RON Transatlantic acquiring a majority stake in the manager.

At the time, SkyBridge's co-founder, Anthony Scaramucci, was positioning himself to leave the firm to take on a role with the incoming administration of President Donald Trump.

When first announced, HNA and SkyBridge had predicted the deal could be inked by the second quarter of 2017. Instead, deliberations by the Committee on Foreign Investment in the U.S. have continued to drag on for 15 months.

The committee has outlined a "path to approval subject to certain mitigation measures," but uncertainties regarding the time required to garner final approval have convinced both firms it was not in their business interests to pursue the transaction, the joint news release said.

Mr. Scaramucci, who served as Mr. Trump's White House's communications director for a tumultuous 10-day stint in July 2017, will be returning to SkyBridge as "co-managing partner to focus on strategic planning and marketing efforts for the firm," the joint news release said.

Guang Yang, president, HNA Group – North America, said in the news release HNA and SkyBridge will "explore ways to leverage our respective strengths in support of a potential marketing and distribution partnership in Asia."

With Chinese regulators maintaining a tight grip on local investors' investments in overseas stocks and bonds, it's unclear how much leeway HNA would have, for the moment, in distributing SkyBridge's strategies on the mainland.

The latest news release listed SkyBridge Capital's assets under management or advisement at roughly $10.4 billion as of February, down from the $12 billion it reported as of Nov. 30, 2016, at the time of HNA and SkyBridge's initial announcement in January 2017.

HNA Capital's conglomerate, HNA Group — which in January 2017 had suggested its investment in SkyBridge would be an "important step in HNA Capital's strategy to build a global asset management business" — reported $100 billion in annual revenues for 2017, up from $30 billion the year before.