HNA Group's empire-building puts it on a risky trajectory. The Chinese travel outfit has spent tens of billions of dollars abroad on everything from land and hotels to high finance. These are just opening gambits as HNA seeks to amass trillions of dollars in assets.

In just a couple of years, bold M&A has launched HNA onto the world stage. Investments in aircraft leasing, cargo handling, airline catering, Hilton hotels, and computer wholesaling come to US$30 billion. In recent weeks it has built a US$1.1 billion stake in Deutsche Bank, put down US$2.2 billion for marquee New York offices, and bought into Old Mutual's U.S. fund-management arm. Reuters says it is now in talks about buying the publisher of Forbes, the U.S. business magazine famous for tallying the world's wealthy, and German shipping financier HSH Nordbank.

The overseas forays follow an incredible run at home. HNA started by operating a regional carrier on the beach resort island of Hainan with just one Boeing 737 to its name, according to a 2014 profile. Co-founder Chen Feng, who shares the title of chairman with company veteran Wang Jian, espouses a management ethos blending Buddhism and ancient Chinese philosophy. Under Chen and his colleagues, HNA now runs more than a dozen airlines, a similar number of airports, thousands of shops and hotels, and much else besides.

Today it boasts a trillion yuan (US$145 billion) in assets and over 400,000 staff. The HNA Group is itself private, partly owned by a charitable foundation. But there are at least a dozen listed units, mostly in China and Hong Kong, including the US$8 billion Hainan Airlines. In short, HNA exemplifies the ambition of today's China Inc. So far that has paid off fabulously - at least for bankers and those with assets to sell.

Still in Fashion

HNA's appetite is more impressive than its financials. The unlisted parent is indebted and not terribly profitable: at end-2015, total debt was 10.7 times EBITDA, or roughly 273 billion yuan. Debt made up 70.4 percent of total capital, although that ratio has fallen 4.1 percentage points over the previous four years. HNA made a slim 3.6 percent return on equity, Breakingviews calculates. However, these accounts offer just a snapshot into a complex, fast-growing business - and one that probably prioritises future growth over current returns.

There is some logic in expanding across transport, tourism and aviation. Diversifying out of airlines, a famously value-destructive industry, makes sense. So does reducing overall exposure to China's economy and currency; given question marks about both, it is rational for Chinese firms to borrow cheaply and buy foreign assets.

But HNA's thesis that business lines that move people, things, and money around should naturally fit together doesn't seem convincing. Understanding Chinese travellers does not help when it comes to valuing a Western investment bank or a hedge-fund platform, nor are there obvious concrete benefits from shared ownership.

In the end, this looks like old-school empire-building. While Western outfits like General Electric have tightened up considerably, giant conglomerates never went out of fashion in China. Bosses often want companies to be as big as possible, rather than maximising profit and efficiency.

That would help explain why HNA is spending so freely. For example, it paid Blackstone 15 percent more than the market price for a stake in Hilton and won a series of property auctions in Hong Kong, a famously expensive market. A 2015 Harvard Business School case study says HNA is targeting $5 to $6 trillion of assets by 2025 - more than double the $2.5 trillion of assets held today by JPMorgan, America's biggest bank, and at least eight times the $621 billion of assets at Warren Buffett's Berkshire Hathaway. It is hard to see HNA going so far, so fast, while staying disciplined.

Communist Credentials

Does HNA have other, hidden motives for its buying spree? Probably not. Like any big Chinese outfit, HNA is not entirely separate from party or state. Chen attends high-powered Communist Party gatherings. State banks are big supporters. And HNA matters hugely to its local government in Hainan.

But that does not mean HNA is doing Beijing's bidding. Unlike other areas where China is expanding, from movies to nuclear power, little of what HNA does looks strategically significant. Even the attempt to buy SkyBridge, the hedge-fund firm run by Donald Trump supporter Anthony Scaramucci, seems more naive than malign in retrospect, given the inevitable resulting controversy.

The better question is whether HNA is heading for trouble, and what would happen if it blew up. There is no suggestion that HNA today is in anything other than fine financial health. A hands-off approach to acquisitions should in theory mean it gets the benefit of skilled local management.

But history is littered with M&A machines that over-paid and over-reached: from ITT, the 1960s uber-conglomerate, to dotcom-darling WorldCom and drug industry consolidator Valeant. The wider an empire's territory, the harder it is to govern. The more debt deployed, the greater the financial risk.

Beijing hates a mess. It seems doubtful the government would allow a collapse of a big Chinese company, at least if it could avoid it. Officials would do their best to avoid contagion, job losses and national embarrassment.

But there are limits. Were things ever to go wrong, it would be naive to assume foreign lenders would be made whole, even if the operating business carried on. The 1999 collapse of Guangdong International Trust & Investment Corp made clear Beijing would let overseas investors take losses, contrary to expectations. The GITIC default involved less than US$5 billion in debt. Were a globe-spanning business twice as big as JPMorgan to run into difficulties, the fallout could make GITIC's woes look triflingly small.