China Evergrande’s Founder Hui Ka Yan Faces Surveillance and Growing Debt Woes
Chinese property giant China Evergrande Group is facing mounting pressure as its founder, Hui Ka Yan, comes under police surveillance and the company’s debt risks liquidation. This alarming development comes just two years after Hui seemed to be confidently addressing his debt issues and setting goals for debt reduction.
Hui Ka Yan, a billionaire businessman, appeared at the centenary celebrations of the Chinese Communist Party in July 2021, mingling with power brokers and presenting a facade of stability. However, Bloomberg News reported that Hui is now under police surveillance, and he has become inaccessible to his staff.
With total liabilities exceeding $300 billion, China Evergrande Group is the world’s most indebted developer. The company’s troubles have worsened as it faces an investigation into its main China unit, preventing it from issuing new debt and complicating its restructuring plans.
Hui Ka Yan, a former steel technician, founded Evergrande in 1996 and built his fortune on low-priced homes. Under his leadership, the company aggressively expanded, relying on loans to finance land acquisitions and selling homes with low margins for quick turnover. Evergrande achieved annual sales of 700 billion yuan ($95.8 billion) by 2020.
Once Asia’s richest person in 2017 with a net worth of $45.3 billion, Hui’s fortune has significantly diminished to an estimated $3.2 billion today.
Hui Ka Yan has faced skepticism in the past regarding Evergrande’s highly leveraged projects. However, he assured investors and reporters that the company’s high turnover and asset value were sufficient to cover its debts.
Despite his past success and influence, Hui’s recent troubles signal a significant downfall. The investigation into Evergrande’s main unit and the company’s growing debt crisis have heightened concerns among regulators about the potential for contagion in the market.
Hui Ka Yan’s association with Hong Kong tycoons, including participation in the poker club, a tight-knit circle of investors, supported Evergrande during its 2009 initial public offering. Cheng Yu Tung, the late founder of New World Development, injected $150 million into Evergrande at that time.
China Evergrande Group has faced repeated warnings from regulators to address its debt burden and financial stability.
Hui Ka Yan acknowledged the support he received from the Chinese government and society during the 2018 China Charity Awards. He expressed gratitude for the country’s policies that allowed him to flourish and contribute to society.
The current surveillance of Hui Ka Yan and the uncertain future of Evergrande highlight the challenges facing the property giant. As the company’s debt crisis continues to worsen, stakeholders and investors are closely watching to see how the situation unfolds, aware of the potential impact it could have on the broader financial landscape in China.
In conclusion, the surveillance of China Evergrande’s founder Hui Ka Yan and the company’s escalating debt crisis have put the property giant’s future at risk. With over $300 billion in liabilities and investigations hampering its operations, Evergrande’s challenges are mounting. The outcome of this situation will have significant implications for China’s real estate market and the broader financial system.
