RRJ-Led Group in Talks to Invest $4 Billion in HNA’s Ingram Micro

(Bloomberg) -- RRJ Capital, run by former Goldman Sachs Group Inc.’s partner Richard Ong, is in advanced talks with the embattled HNA Group Co. to lead a $4 billion investment in Ingram Micro Inc., people familiar with the matter said.

The group led by the Hong Kong-based private equity firm will invest through an HNA bond that can be converted into close to 50% of Ingram Micro’s shares, the people said, asking not to be identified before the agreement, which may be signed as early as next week. The bond proceeds will be used to pay down a loan taken by HNA from Chinese banks for the acquisition of the U.S. networking and software distributor, the people said.

Officials at RRJ and HNA declined to comment, while Ingram Micro didn’t immediately respond to queries after regular office hours.

HNA has faced an uphill struggle to fix its bloated debt load despite agreeing to sell more than $25 billion in assets since the start of 2018. In April, creditors of the firm took the extraordinary step of seizing golf courses and other assets after a unit reneged on a loan payment.

Chinese Slim-down

With the ongoing U.S. trade disputes with China, the reduction of Chinese ownership in Ingram Micro is expected to help the consortium win the approval of the Committee on Foreign Investment in the U.S., one of the people said. The funds of RRJ don’t include Chinese investors, with two thirds of its funds coming from North America and Europe, and the rest pooled from Asia and the Middle East, the person said.

RRJ’s investment in Ingram Micro began more than a year ago, when it bought preference shares held by two special purpose vehicles that put the private equity firm in a position to invest more if HNA decides to dispose of the U.S. company and another asset, according to people familiar with the matter at the time.

HNA completed its purchase at the end of 2016 in all-cash transaction with an equity value of about $6 billion.

RRJ began buying HNA’s overseas assets when the debt-laden Chinese conglomerate started to restructure its business more than a year ago. In April, the private equity firm completed the purchase of Gategroup Holding AG in a deal that valued the airline catering company at $2.8 billion.

RRJ is co-founded by Ong’s brother Charles, a former chief investment officer at Temasek Holdings Pte. The Singapore state-owned investment has also worked with RRJ in the purchase of HNA assets.

UBS Group AG and Credit Suisse Group AG advised RRJ on the transaction. White and Case advised HNA, the people said.

--With assistance from Hailey Waller.

To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net

To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Linus Chua, Ian Fisher

©2019 Bloomberg L.P.