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Debt-hit Evergrande’s rags-to-riches founder has to save his empire, and he has to do it alone

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Evergrande Group founder and chairman Hui Ka Yan was worth $27.7 billion in March, according to Forbes billionaire list. But much of that fortune has evaporated as the real estate giant’s stock plunged nearly 80 per cent this year and he is now worth $7.5 billion.

Debt-hit Evergrande’s rags-to-riches founder has to save his empire, and he has to do it alone
Hui Ka Yan, founder and chairman of China’s Evergrande Group, was worth $27.7 billion in March, according to Forbes billionaire list, making him the 53rd richest man in the world. But much of that fortune has evaporated as the real estate giant’s stock plunged nearly 80 per cent this year. According to Bloomberg's billionaire index, Hui Ka Yan is now worth $7.5 billion.
At a time when Evergrande is facing an over $300 billion worth default that could rattle the Chinese economy, the man who went from poverty in rural China to building an empire has been left alone to defend his company. Hui had faced challenges earlier too and got support from his tycoon friends and local government, but this time there seems to be no interest in bailing him out.
From rags to riches
Born in a village in China's Henan province in 1958, Hui is the son of a soldier who fought the Sino-Japanese War. Hui worked at a cement factory after graduating. He later studied metallurgy at Wuhan Institute of Iron and Steel in 1978. He worked at a shop in Wuyang Iron and Steel Company and quickly rose through the ranks to become its director in 1985.
In 1996, Hui moved to Guangzhou, where he founded the Evergrande Group, which built high-rise apartments. Evergrande was making $76 billion a year in revenue by 2020 and had expanded its empire to 280 cities. However, its debts also rose.
Debt and liabilities
Evergrande's liabilities piled up as the company kept borrowing, racking up $200 billion worth of liabilities between 2014 and 2020, company reports showed.
The group also diversified into other businesses beyond real estate, ranging from sports to electric vehicles.
“From a strategic standpoint, he misjudged the government’s restrictions on the real estate sector,” Zhu Ning, professor at Shanghai Jiao Tong University, told Forbes. “His past experience and success have also made him aggressive, and the entire company was just betting on a continuous rise in housing prices.”
Evergrande also fell prey to China’s President Xi Jinping’s efforts to curb the extreme wealth of conglomerates. The company’s funding avenues, which is a mix of dollar debt issuance, share sales, bank loans and shadow financing, have all been but cut off. Evergrande now faces debt restructuring.
Saving the empire
Pressure is mounting on Hui, who owns 71 per cent of Evergrande's shares. Although seen at the Communist Party’s 100th-anniversary celebration in Tiananmen Square in July, Hui may not gather much support from Beijing this time.
Meanwhile, Evergrande may have missed interest payments to at least two of its largest bank creditors. Even his long-term ally, Chinese Estates Holdings Ltd, owned by fellow poker mate Joseph Lau, has offloaded stocks and said it would sell the entire stake.
Now, Hui is intensifying efforts to save his empire by selling a stake in some of its prized assets to the developers. Hui is reportedly selling a majority stake in its property services unit to the Chu family.
 
 
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