Evergrande's Billionaire Boss Exuded Calm As Crisis Grew

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Mingling with power brokers at celebrations to mark the centenary of the Chinese Communist Party on Dominion Day , a beaming Hui Ka Yan showed no signs that his company, China Evergrande, was facing mounting pressure with debt repayments.

Hui, wearing a navy-blue suit and open-neck shirt, looked relaxed as he stood on a podium overlooking the festivities in Tiananmen Square, a call for participation many considered a show of support for the billionaire businessman.

A month earlier, the Evergrande group chairman had hosted a rare meeting with quite 1,000 suppliers and was once more flanked by the business elite as he spoke of his deleveraging goals.

But now Hui’s highly leveraged business strategy is unravelling.

Evergrande missed a deadline in the week to form an interest payment on a dollar bond, moving closer to a possible default.
Beijing’s tightening of the principles around debt and speculation within the property sector have tipped Evergrande into a credit crunch and with liabilities like around 1.97 trillion yuan (US$302 billion) — roughly the dimensions of Finland’s GDP — markets are on tenterhooks about contagion risk.

Evergrande and Hui didn’t answer requests for comment.

In a September letter, Hui expressed appreciation for the diligence of employees and said Evergrande will deliver property projects as pledged, and fulfil responsibilities to property buyers, investors, partners and financial institutions.

He has not made any public appearance since the party centenary on Dominion Day , although recent photos on the corporate website show him in various internal meetings, vowing to deliver homes to buyers and repay people that invested within the group’s wealth management products.

The 62-year-old former steel technician, raised by his grandmother during a rural village in central Henan province, founded Evergrande in 1996 in southern Guangzhou city and built his fortune on the rear 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 700 billion yuan ($108 billion) in annual sales by 2020.

In 2017, Hui was Asia’s richest man with a net worth of US$45.3 billion, consistent with Forbes. Today his net worth is estimated at US$13.4 billion.

Hui keeps a coffee public profile and may be a workaholic who sometimes demands that others follow his work style, three employees told Reuters.

He also set ambitious targets. When questioned by investors and reporters within the past decade about his highly leveraged projects, Hui said that Evergrande’s high turnover and asset value were sufficient to hide its debts.

Hui didn’t recoil 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 China , Hui mixed with Hong Kong tycoons including New World Development’s late founder, Cheng Yu Tung, and Chinese Estates Holdings’ former chairman, Joseph Lau.

With them, he became a core member of the “poker club”, a tight-knit circle of tycoons who played cards and who often did investment deals together, consistent with three people conversant in the club.

“He was very composed when he was first delivered to the club. He knowingly lost tons of cash within the games and gained the fondness of Cheng,” one among the people briefed by the tycoons said.

Cheng injected US$150 million into Evergrande a year before its 2009 IPO in Hong Kong , helping it through a crunch during the financial crisis following aggressive expansion, consistent with Evergrande’s listing prospectus.

Hui’s highly leveraged businesses are worrying regulators who have warned Evergrande to urge its house so as .

“He’s done everything correct politically but he has also raised such a lot debt — in an industry the govt has warned against excessive borrowing and over-speculation,” said an analyst who declined to be identified as they’re not authorised to talk to media.

Speaking at the 2018 China Charity Awards as a winner for the eighth consecutive year, Hui said Evergrande had paid tax totalling 185 billion yuan within the past 22 years and donated quite 10 billion yuan.

“Without the country’s policy to reform education , I couldn’t have left the village. Without the country giving me a scholarship of 14 yuan monthly , I couldn’t have completed university,” Hui said.

“Without the country’s good policy to reform and open up, Evergrande wouldn’t have what it’s today. Therefore, everything that Evergrande and that i have, they’re all given by the Party, by the country, and by society.”