HNA is offloading assets to pay off debt used to fuel more than $40 billion of deals. A U.S. hedge fund has snapped up a Swiss investment, and a hefty property portfolio is reportedly set to follow.

Hainan-based conglomerate HNA has leaned heavily on debt and other, less transparent financing methods for its recent buying binge. The Chinese conglomerate is the largest shareholder in Deutsche Bank, with a 9.9 percent stake, and has also bought up real estate including in the U.S. and in the U.K.  as well as big equity stakes in a unit of Old Mutual, Frankfurt's airport, and the Hilton hotel chain.

Cracks are beginning to emerge in HNA's acquisition tear: it has appointed Hong Kong's Citic Bank to help with what the lender says is a «temporary liquidity» squeeze as financing commitments from several banks are called at about the same time. HNA denies that it could collapse under the debt pile, which would upend Asian markets.

Swiss Ties

The latest asset to go? A stake of about 6 percent stake in Swiss duty-free retailer Dufry, which has subsequently been snapped up by U.S.-based hedge fund Elliott, according to the «Financial Times» (behind paywall).

HNA is also shopping around major property portfolio including real estate in New York, London and other big cities, «The Wall Street Journal» (behind paywall) reported recently. Meanwhile, HNA units are mothballing plans to raise money in the bond market, according to «Bloomberg»: the latest to be canceled is a 1 billion yuan offering by Tianjin Airlines Co. slated for this week.

Feeding Frenzy

The conglomerate's more than $40 billion feeding frenzy recently has been a boon for investment banks: HNA maintains ties to UBS, which put up 2.6 billion euros for the Chinese bank's purchase of the Deutsche Bank stake for example. The Swiss bank reportedly held steady with HNA, even as Citigroup, Bank of America, Morgan Stanley and even Goldman Sachs either withdrew business relations or told their bankers not to write new business with the Chinese firm.

Deutsche Bank itself has been more reticent: Chief Executive John Cryan reportedly angered his chairman, Paul Achleiter, by repeatedly ducking meetings with HNA boss Adam Tan. Cryan's reasoning? The former investment banker reportedly cast doubt on HNA's financing methods months ago, as finews.asia reported.