The world’s largest contractor is in custody: here is his rise and fall
Concerns about the real estate crisis rose again after Hui Ka Yan, the founder of the Evergrande Group, which is at the center of the real estate crisis in China, was placed under police control.
The arrest process once again fueled concerns about whether the Evergrande crisis would spread to financial markets and raised questions about the fate of the 64-year-old billionaire.
Hui, once Asia’s second-richest person and the world’s largest contractor, has an interesting life story.
Here’s the rise and fall of Evergrande’s rags-to-riches founder:
WHO IS HUI KA YAN?
The son of a lumberjack who grew up in poverty, Hui was a giant billionaire who built Evergrande into China’s largest developer to buy up huge tracts of land before operating in industries ranging from bottled water to professional football and electric vehicles. .
Hui was born in the Chinese province of Henan in 1958. He lost his mother when he was only 8 months old and was raised by his grandmother, who sold homemade vinegar, and his father, who made a living by chopping firewood.
Hui, who was encouraged by then-President Deng Xiaoping’s economic reform plan when he was young, left his job at a steel company and went to Shenzhen in 1992. He later began recruiting in Guangzhou, the capital of Guangdong.
He founded Evergrande in 1996 and based its growth on heavy debt. Evergrande has become the most indebted company in dollars in the industry. He also claimed the title of the country’s largest real estate developer with contract sales. The company claims to have more than 1,300 projects in 280 cities.
Hui has also invested in areas approved by the CCP’s top leadership, such as electric vehicles and traditional Chinese medicine. He also bought the Guangzhou FC football team.
STRONG POLITICAL CONNECTIONS
Hui, 64, has been a member of the Communist Party for more than 30 years. In 2008, she attended the Chinese People’s Political Consultative Conference, an elite group of government officials and business leaders.
However, Hui’s close political ties with Chinese President Xi Jinping were not enough to avoid a default and a deepening crisis.
Serious financial problems arose due to the company’s unhealthy growth strategy and problems in the real estate market. Evergrande began experiencing liquidity shortages in 2020 and planned to halve its $100 billion debt by mid-2023.
Also during this period, China’s property market began to slow as regulators cracked down on excessive borrowing. The financing problem caused the company’s shares and bonds to fall and, after some dollar bonds were paid late, Evergrande missed the December 2021 deadline to settle two bond coupons.
HE IS DETAINED UNDER SUPERVISION
Finally, Bloomberg reports that it is unclear why Hui is in custody, according to sources who say Chinese police took Hui earlier this month and monitored him at a designated location.
This measure means that, according to China’s Criminal Procedure Code, a person cannot leave the premises, meet or communicate with other people without approval. According to the law, passports and identity cards must be handed over to the police, but the process cannot exceed six months.
The move was seen as the latest sign that the world’s most indebted property developer has entered a new phase. The development has raised questions about the fate of Evergrande after recent setbacks in its restructuring plan have rattled financial markets and raised the risk of liquidation.
MOST OF HIS WEALTH MELTED.
Hui’s net worth was $39.8 billion as of July 2020, according to the Bloomberg Billionaires Index. At the end of August, Hui’s net worth fell to $1.7 billion, down 96 percent from its peak.
Most of Hui’s wealth came from Evergrande shares, from which he received more than $7 billion in dividends after an initial public offering in 2009, according to Bloomberg calculations.