Newsmaker: China Evergrande's billionaire boss goes from power circles to police surveillance

Chinese Estates Holdings

27/09/2023 10:06

By Clare Jim
       HONG KONG, Sept 27 (Reuters) - Mingling with power
brokers at celebrations to mark the centenary of the Chinese
Communist Party on July 1, 2021, a beaming Hui Ka Yan showed no
signs that his company, China Evergrande Group, was facing
mounting pressure paying its debts.
    Hui, wearing a navy-blue suit and open-neck shirt, looked
relaxed as he stood on a podium overlooking the festivities in
Tiananmen Square, an invitation many considered an official show
of support for the billionaire businessman.
    A month earlier, the Evergrande  3333.HK  group chairman had
hosted a rare meeting with more than 1,000 suppliers and was
once again flanked by the business elite, as he spoke of his
debt deleveraging goals.
    Just two years later, Hui, who founded Evergrande in 1996 in
the southern city of Guangzhou, is under police surveillance,
Bloomberg News reported on Wednesday, and his property empire is
under growing risk of liquidation.
        A person close to Evergrande said Hui had stopped
contacting staff over the past few days, while an industry
source said he had become totally inaccessible. Both of them
declined to be identified as they were not authorised to speak
to the media.
        Spokespersons at Evergrande, the police department in
Guangdong province, whose capital is Guangzhou, and the public
security ministry did not respond to Reuters requests for
comment.
    Evergrande's total liabilities stand at more than $300
billion, roughly the size of Finland's gross domestic product,
and the world's most indebted developer's troubles took a rapid
turn for the worse this week. 
        The company, which has been seeking creditor approval
for an offshore debt restructuring plan, said on Sunday it was
unable to issue new debt due to an investigation into its main
China unit, further complicating its revamp proposal.
    Reuters reported on Tuesday that a major Evergrande offshore
creditor group was planning to join a liquidation court petition
filed against the developer if it does not submit a new debt
revamp plan by the end of October.  
    The 64-year-old former steel technician, raised by his
grandmother in a rural village in central Henan province, built
his fortune on the back of low-priced homes.
    Under Hui, the property developer expanded aggressively by
raising loans to support its land-buying sprees and selling
homes at lower margins for quick turnover. Evergrande grew to
achieve 700 billion yuan ($95.8 billion) in annual sales by
2020.
    In 2017, Hui was Asia's richest man with a net worth of
$45.3 billion, according to Forbes. Today his net worth is
estimated at $3.2 billion.
    Hui was known for keeping a low public profile and being a
workaholic, who at times demanded that others followed his work
style, three employees told Reuters.
    He also set ambitious targets; when questioned by investors
and reporters in the past decade about his highly leveraged
projects, Hui said that Evergrande's high turnover and asset
value were sufficient to cover its debts.
    
    POKER PALS
    Hui did not shy away from new ventures, especially in
support of China's larger goals. He dabbled in electric cars and
soccer, both a passion of Chinese President Xi Jinping.
    Outside mainland China, Hui mixed with Hong Kong tycoons.   
 With them, he became a core member of the "poker club", a
tight-knit circle of tycoons who often did investment deals
together, according to three people familiar with the club.
    "He was very composed when he was first brought to the club;
he knowingly lost a lot of money in the games and gained the
fondness of Cheng," one of the people briefed by the tycoons
said, referring to the late founder of New World Development,
Cheng Yu Tung.
    Cheng injected $150 million into Evergrande a year before
its 2009 IPO in Hong Kong, according to Evergrande's listing
prospectus, helping it through a crunch during the financial
crisis following its aggressive expansion, 
    Hui's debt-laden businesses worried regulators who had
warned Evergrande to get its house in order amid fears of
contagion.
    Speaking at the 2018 China Charity Awards as a winner for
the 8th consecutive year, Hui said Evergrande had paid tax
totalling 185 billion yuan in the past 22 years and donated more
than 10 billion yuan.
    "Without the country's policy to reform higher education, I
could not have left the village. Without the country giving me a
scholarship of 14 yuan every month, I could not have completed
university," Hui said.
    "Without the country's good policy to reform and open up,
Evergrande would not have what it has today. Therefore,
everything that Evergrande and I have, they are all given by the
Party, by the country, and by society."
    ($1 = 7.3085 Chinese yuan renminbi)