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Rise and Fall Of Hui Ka Yan, the founder of Evergrande Group crisis-hit

Hui Ka Yan’s fortune has been significantly reduced as a result of the dramatic decline in Evergrande stock since late 2020.

Hui Ka Yan, the creator of the China Evergrande Group, which is at the center of China’s real estate crisis, has been taken into custody by the police, raising the possibility that the company has reached a new stage involving the criminal judicial system.

The decision raises more concerns about the future of the most indebted developer in the world after recent setbacks to its restructuring plan shook financial markets and increased the likelihood of a liquidation. It also raises questions about the 64-year-old billionaire’s personal fate. Here is everything you need to know about the founder of Evergrande’s journey from poverty to wealth:

  1. Who is Hui Ka Yan, first?
    Hui Ka Yan, the creator of Evergrande, was present and watching the festivities in Tiananmen Square as Chinese President Xi Jinping gave a speech in 2021 to commemorate the 100th anniversary of the establishment of the Communist Party, announcing his country’s inevitable progress.

Hui, who was raised in poverty as the son of a woodcutter, has been a member of the party for more than three decades and has made investments in traditional Chinese medicine and electric vehicles (EVs). He has also been a well-known philanthropist, despite the fact that his wealth has recently declined. Evergrande’s acquisition of the local soccer team Guangzhou F.C. revealed a shared love of the game with Xi. However, in the end, such political connections were insufficient to stop his empire from defaulting and spiraling further into catastrophe.

2. How did Hui become Evergrande’s chairman?

Hui was born in Henan province in 1958 and is also known as Xu Jiayin in Mandarin. His grandmother, who sold homemade vinegar, and his father, a woodcutter, reared him when his mother passed away when he was just eight months old.

In 1992, Hui left his work at a steel company in anticipation of Deng Xiaoping’s economic reform program and moved to Shenzhen. Later, he started building homes in Guangzhou, the province of Guangdong. He established Evergrande in 1996, relying heavily on debt to support its expansion. As a result, it grew to become the largest dollar borrower among its competitors and, for a brief while, the top developer in the nation by contractual sales. According to Evergrande, it has projects in more than 280 cities.

In 2020, the firm had a liquidity crisis and announced a strategy to substantially cut its $100 billion debt load in half by the middle of 2023. But when authorities slapped down on excessive borrowing, China’s housing market started to decline. The company’s shares and bonds fell as a result of more funding issues, and after missing a deadline to pay two dollar-bond coupons in December 2021 as a result of several dollar bond late payments.

3. What is the value of Hui?

According to the Bloomberg Billionaires Index, Hui’s net worth as of late August was $1.7 billion, a 96% decrease from a five-year peak of $39.8 billion in July 2020. According to estimations by Bloomberg, a large portion of his wealth came from his ownership in Evergrande, from which he had received more than $7 billion in dividends ever since the company went public in 2009.

Since late 2020, Evergrande shares have had an epic decline that has significantly reduced his personal fortune. He has also used his own funds to help the company’s liquidity after the defaults.

4. Where is Hui now, then?

According to Bloomberg, Hui was hauled away by Chinese police early this month and is currently being observed at a specific place under “residential surveillance,” a sort of police action that is less official than formal custody or arrest. Right now, it’s unsure where he is specifically. According to China’s Criminal Procedure Law, which stipulates that the procedure should not go more than six months, Hui is unable to leave that area, meet with others, or speak with them without permission as a result of the surveillance measures. Identifier cards and passports will have been turned over to law enforcement.

5. What has the Chinese government stated?

Since Bloomberg reported on Hui’s incarceration, the Chinese government has been mum on his whereabouts. Inquiries for comment were not answered by the Guangdong police.

6. What will be Hui’s next step?

At the present, nothing is certain about it. Restrictions on Hui’s freedom reflect an ongoing investigation, even if being under residential surveillance does not guarantee that he will be charged with a crime in the future. Authorities allegedly detained two former executives along with other employees from Evergrande’s wealth management division earlier this month.

7. How has Evergrande been impacted by his disappearance?

Hui’s abrupt absence has increased uncertainty around the company’s planned reorganization and raised the risk of a liquidation if creditors are unable to come to an agreement. Hui is still the chairman of Evergrande.

On Thursday, the developer, together with its businesses for electric vehicles and property services, ceased trading in Hong Kong. In a notice to the Hong Kong stock market, no explanation for the halt was provided.

8. What has happened to the price of Evergrande’s stock?

Since its peak in July 2020, it has fallen by 99%, losing over $47 billion in market value.

Following rumors that the property tycoon had alerted Chinese officials to a probable cash crisis that may pose systemic dangers, concerns regarding the property giant’s financial stability erupted to the surface in September 2020. As the company attempted and failed to reduce debt and assuage investors, shares were then severely damaged until, in late 2021, it was deemed to be in default. In late August, Evergrande’s shares plunged as much as 87% following a 17-month trading standstill as it disclosed further losses and postponed creditors’ meetings, turning it into a penny stock.

 

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