Explainer: China's embattled developer Kaisa Group and the chairman behind it

Kaisa Prosperity Holdings

12/11/2021 07:49

HONG KONG, Nov 12 (Reuters) - After cash-strapped developer
China Evergrande https://www.reuters.com/business/several-bondholders-china-evergrande-receive-overdue-bond-coupon-payments-media-2021-11-11
 Group  3333.HK  once again averted a destabilising default this
week, investor focus is shifting to other Chinese developers
with offshore payments coming due, especially Kaisa Group
 1638.HK .
    Kaisa has more than $59 million in interest payments due on
Thursday and Friday, with 30-day grace periods for both. It was
not immediately known if Kaisa, which has already missed https://www.reuters.com/business/chinese-developer-kaisa-plunges-poor-oct-sales-add-liquidity-worries-2021-11-04
 payments on some wealth management products at home, has made
the dollar-bond coupon payments.
    Here are key facts about the developer and its founder:
    
    WHAT IS KAISA GROUP?
    The company was founded by Kwok Ying Shing, now 57, in the
southern Chinese city of Shenzhen in 1999. 
    In 2015, Kaisa became China's first real estate company to
default on an overseas bond. It bounced by 2017 and is now
China's No. 25 developer by sales, with projects in 51 cities
across the country, focusing on the Greater Bay Area of Hong
Kong, Macau and China's Guangdong province. 
    Kaisa has the most offshore bonds - $10.9 billion at the end
of June - of any Chinese developer after Evergrande.
    Dubbed the "King of Urban Renewal" by Chinese media, Kaisa
has some 200 urban renewal projects across China, generating
over one-third of the group's revenue, with 120 in home-base
Shenzhen, where land is scarce and home prices among the highest
in the country. 
    In the first six months of the year, Kaisa's contracted
sales climbed 77% from the same period last year to 63.9 billion
yuan ($9.99 billion). Borrowings grew 2% from the end of last
year to 123.8 billion yuan and assets rose 3% to 319 billion
yuan.
    Kaisa shares, which have plunged more than 70% this year as
the debt crisis among China's developers has grown, were halted
on Nov. 5. It has a market value of HK$7.09 billion ($1
billion).
    
    WHO IS CHAIRMAN KWOK?
    He was born in Chaozhou, some 300 km (180 miles) northeast
of Hong Kong in Guangdong. Little is known about Kwok's
education or work history, but he amassed enough money to found
Kaisa at the age of 35.  
    He and his two younger brothers worked in trading and
industrial businesses before entering real estate, according to
Chinese media. The younger of the brothers, Kwok Chun Wai, is
chairman of Hong Kong brokerage Fulbright Financial Group.
    The Kaisa chairman and founder is strict with his staff but
is reasonable, and he maintains high standards for himself, one
former and two current employees told Reuters.
    Kwok is an excellent swimmer, a former employee said. Kaisa
has operated sports stadiums and bought the Shenzhen Football
Club in 2016, hiring stars Clarence Seedorf from Netherlands and
Sweden's Sven-Goran Eriksson as head coach for a short period.  
    
    SHENZHEN AND HONG KONG
    Kwok is believed to have good connections in Shenzhen thanks
to his involvement in many urban renewal projects that other
developers tend to avoid, despite high profit margins.
    These projects require redevelopment expertise and entail
long four- to 12-year conversion times and layers of government
approvals that can mean political risks.
    After former senior Shenzhen official Jiang Zunyu was
arrested for corruption in 2014, authorities blocked sales of
most of Kaisa's Shenzhen projects with little explanation,
drying up its cashflow.
    Courts froze the company's assets nationwide at the request
of its lenders, leading to default the next year.
    In recent years Kwok has lived mostly in Hong Kong, where
Kaisa is listed, said two people with knowledge of his
whereabouts. He became more active in investing in the former
British colony last year. 
    Kaisa paid more than $1 billion for four residential sites
in the city. It bought a controlling 28% stake in newspaper Sing
Tao News Corp  1105.HK  for $48 million via Kwok's daughter Kwok
Hiu Ting, the vice chairwoman of property management unit Kaisa
Prosperity  2168.HK .
    
    WHAT ELSE DOES KAISA DO?
    With units listed in Hong Kong, Shenzhen and New York, Kaisa
operates businesses from medical services and tech to tourism
and marine transport, together contributing around 5% to the
group's revenues. 
    Kaisa Health Group  0876.HK  focuses on dental prosthetics,
healthcare and sports rehabilitation and has sales and service
networks in more than 20 countries, including the United States
and Germany, according to its website. 
    
    ($1 = 7.7922 Hong Kong dollars)
    ($1 = 6.3947 Chinese yuan renminbi)
    

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Kaisa says trying to solve liquidity issues, pleads for 'more
time and patience'     urn:newsml:reuters.com:*:nL1N2S000N
Kaisa, units trading suspended as China property debt crisis
routs developers' shares     urn:newsml:reuters.com:*:nL1N2RW06K
Chinese developer Kaisa unit misses payment, debt worries mount 
   urn:newsml:reuters.com:*:nL1N2RV0B3
EXCLUSIVE-China's Kaisa plans to sell property management unit,
Hong Kong sites     urn:newsml:reuters.com:*:nL1N2RP0FH
Evergrande dodges default again; property sector debt concerns
linger     urn:newsml:reuters.com:*:nL1N2S207Z
FACTBOX-Upcoming coupon payments by Chinese property developers 
   urn:newsml:reuters.com:*:nL4N2RV22P
FACTBOX-What are China's wealth management products?   
 urn:newsml:reuters.com:*:nL4N2RW0TE
BREAKINGVIEWS-Bigger China property risk would be Xi blinking   
 urn:newsml:reuters.com:*:nL1N2S201S
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 (Reporting by Clare Jim; Editing by William Mallard)
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters
Messaging: clare.jim.thomsonreuters.com@reuters.net))