Rich friends who helped Evergrande tycoon count their losses

Hui had long been able to count on his poker buddies to support the China Evergrande Group in times of trouble, whether it was by buying stock in his company, reloading his bonds or not taking out any debt. He expanded that circle to raise money for his real estate company in December and for electric vehicle startups in January.

The sharp turnaround in shares of Evergrande and its units means that Pet Friends now face potentially punishing losses. Developer shares are down about 70% this year, while Evergrande Property Services Group Ltd. 34% below the initial public offering price.

Strategic investors who collectively spent $3.4 billion buying shares in China Evergrande New Energy Vehicle Group during its January placement have seen the value of their investments fall by more than 70%. They were unable to sell due to a lock-up agreement. Evergrande sold another $1.4 billion of its shares on the open market to covert investors in May.

Concerns that the company will have to sell assets at a high discount is fueling declines in its publicly traded subsidiaries. The most indebted developer in the world has a total of $300 billion in debt.

Here’s a look at how some Evergrande investors are doing right now:

NEV unit

In January, Hui sold HK $26 billion ($3.4 billion) of shares in Evergrande’s green car unit to six investors, subject to a 12-month freeze. The placement, which came amid a global craze for electric vehicle manufacturers and rising stock markets, sent shares up more than 50% the day after the news. The investors bought the shares for HK$27.30 each. They closed Friday at HK$6.50.

The six are:

• Chen Hua, the chairman of Kingkey Group, who has personally put HK$5 billion into the EV startup through a unit, according to an application.
• Wong Kwong Miu, who owns the mainland-listed Shenzhen Centralcon Investment Holding Co. also personally invested HK$5 billion through a unit.
• Liu Ming Hui, chairman of China Gas Holdings Ltd., invested HK$3 billion.
• Wang Zhongmings Shenzhen Greenwoods Investment Group invested $5 billion.
• Chan Hoi-wan, chief executive officer of Chinese Estates Holdings Ltd. and wife of Hong Kong billionaire Joseph Lau, invested HK$3 billion.
• Wang Kaiguo invested HK$5 billion through Heyirong International Trade Co.

Real Estate Services IPO

Evergrandes’ real estate management arm raised HK$14.3 billion in its IPO in Hong Kong in November, placing it in the lower half of its marketed range. The offering included no fewer than 23 cornerstone investors. While these investors were allowed to sell after June 2, other stakeholders are locked up until December 2.

Three of the strategic investors in the NEV placement were also anchor investors in the real estate services unit, according to the filings and term sheets seen by Bloomberg. Chinese Estates Chan was the largest backer of the pre-listing financing round, subscribing for 5% of the shares, while Kingkey bought HK$236 million. The controlling founder of Centralcon Group made an investment of HK$200 million.

poker friends

Some of Huis’s closest allies come from a group with whom he shares a taste for Chinese poker. Known as the Big Two Club for the name of the game, the clan includes Chinese Estates Lau, New World Development Co.s Henry Cheng and CC Lands Cheung Chung Kiu. They have made countless transactions over the years and are so connected that any default by Evergrande would impact their businesses.

• Chinese Estates posted losses in the first half of the year as a result of the decline in earnings from Evergrande, which cut its annual dividend in March and later decided not to make a special payout. The paper loss of the Evergrande shares was HK$4.11 billion. Chinese Estates shares are trading at their lowest level since 2004.
• China Strategic Holdings Ltd., an investment company backed by New Worlds Cheng, said in a statement Friday that it owns 133.6 million China Evergrande NEV shares. Based on the electric vehicle manufacturer’s latest closing price, its stake is worth about HK$868 million, compared to its investment value of HK$3.9 billion. China Strategic also sold Evergrande bonds for a loss of $4.7 million, according to an Aug. 24 statement.
• CC Land said in its interim report that its stake in Evergrandes’ electric vehicle unit was worth more than 5% of its total assets, its largest investment under that measure.

Suning Fallout

Billionaire Zhang Jindong lost control of the retail arm of his Suning empire when it received a state-backed bailout in July. Concerns over his group’s cash flow flared up in September, when Zhang waived his right to a 20 billion yuan payment from Evergrande. The decision helped his friend Hui save his own company, but made little financial sense for investors.

Shenzhen Support

It’s not just wealthy individuals who feel the pain. Shenzhen Investment Ltd., a publicly traded real estate developer controlled by the government of Shenzhen, said the value of its Hengda Real Estate Group Ltd. decreased by approximately HK$833 million in the first half. As of June 30, the stake was worth about 4% of total assets, according to a statement to the Hong Kong Stock Exchange.

bond buyer

Asia Orient Holdings Ltd., led by secretive tycoon Poon Jing, announced in July that it had amassed Evergrande bonds worth $1 billion, according to an exchange filing, including bonds it had for $230 million in the past year. purchased. At the time of the announcement, the Poons company and its subsidiaries had unrealized losses on disclosed holdings as Evergrande bonds traded at record lows, according to data collected by Bloomberg.

This story was published from a news agency feed with no text changes.