Evergrande’s Wealth Wipeout Hui Ka Yan’s Journey From Asia’s Richest

Описание: Hui Ka Yan, founder of China Evergrande Group, had once amassed a fortune of $42.5 billion, placing him at the top of the wealth rankings for all of Asia. But 73% of that immense fortune has now evaporated, and the tycoon will almost certainly lose even more as anxious creditors, suppliers and homebuyers besiege Evergrande’s offices. The real estate developer has racked up a staggering $305 billion in total liabilities, against cash and cash equivalents of $13.4 billion, leaving many to wonder how any company could take on such a massive amount of debt, and yet that’s not all of it. Evergrande has not only borrowed from banks, trust firms and bondholders, but also from its employees and wider society. The company has as much as $6.2 billion in off-balance sheet debt, according to estimates from local financial journal Caixin, which includes so-called wealth management products sold to retail investors. One of whom is Liz, a 35-year-old employee of a local government branch in the eastern Jiangsu province.“Evergrande is a Fortune Global 500 company, right?” she said, referring to the publication’s ranking of the world’s biggest companies. “And I have a friend who worked at Evergrande and invested 500,000 yuan [$77,000] of her own money. She told me this wouldn’t have problems.”Liz, who asked to be identified only by her English name, said she had purchased 350,000 yuan worth of Evergrande’s wealth management products over the past year, which promised an annualized return of 7.5%, according to screenshots she provided. Evergrande had told her that part of the proceeds would be used to fund its expansion into building electric vehicles, a business that is now also on the brink of collapse. The company’s EV unit had recently warned of a “serious shortage of funds” and said it had suspended paying “some of its operating expenses,” according to a filing to the stock exchange. Liz said that she had successfully redeemed 100,000 yuan in principal and interest payments towards the end of last year. But for the rest due next January, she worries she may never get it back. Financial regulators in Shenzhen are now investigating Evergrande's wealth management unit, according to a Reuters report that cites a letter sent to investors. But a person who picked up a call at the city's financial regulation bureau this afternoon said she isn't aware of the matter, and she didn’t know which government department will deal with the Evergrande problem. "We are waiting for further notice," she said. Evergrande’s potential collapse is reverberating throughout the global financial market. Investors are not only exiting Evergrande but also dumping property-related shares in Hong Kong as they worry about contagion, especially for an economy that depends on real estate for at least a quarter of GDP. Whether Hui, whose current fortune of $11.


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Article Link: https://www.forbes.com/sites/ywang/20...


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