Chinese real estate tycoons save the company with their own money

Chinese real estate tycoons save the company with their own money

In order for the company not to default, the billionaire boss of many Chinese real estate firms spent about $3.8 billion.

The personal assets of Chinese real estate tycoons are the basis for investors to determine whether the company will meet its debt obligations. Over the past few weeks, the founding chairman of at least seven real estate firms has used his own fortune to support the company. This money is taken from the sale of luxury properties or the sale of shares.

China Business News last week reported that Evergrande Chairman Hui Ka Yan has injected more than 7 billion yuan (more than 1 billion USD) into the company since July. The money was raised from the sale of personal assets and stock mortgage, to increase liquidity for this company.

Li Sze Lim and Zhang Li - two co-founders of R&F committed to provide HK$8 billion (more than US$1 billion) as short-term capital to the company, after the real estate agency was approved to sell. for the opponent.

Evergrande boss Hui Ka Yan. Photo: Bloomberg

Yango's Lin Tengjiao also sponsored himself when the real estate company wanted to extend 3 lots of bonds to avoid default. These 3 lots have a total value of 747 million USD.

Sun Hongbin of Sunac also lent the company $450 million interest-free through his funds. Brothers Lin Zhong - Lin Feng - president and director of real estate firm CIFI committed to inject 1.68 billion Hong Kong dollars ($215 million) into this company, through the purchase of newly issued shares.

Ming Pao reported that Shimao Chairman Hui Wing Mao also mortgaged three floors of The Center tower in Hong Kong (China) to borrow HK$1.4 billion ($180 million) for the company. Guo Ziwen also agreed to spend nearly 600 million Hong Kong dollars (nearly 77 million USD) to buy new shares of real estate firm Aoyuan through another company.

Billionaire Sun Hongbin of real estate company Sunac. Photo: Bloomberg

These efforts show the severity of the current liquidity crisis in China's real estate market. Real estate agents cannot make money from selling apartments or selling off properties. Now, when home prices and home sales in China fall, banks are even more reluctant to lend. Yields on bonds issued abroad skyrocketed. Many real estate firms have to rely on the founder as the last resort.

This move is in contrast to foreign businessmen - where limited liability protects the owner's assets from the reach of creditors. However, in China, this boundary is not so clear.

"In China, authorities can put pressure on major shareholders, or controlling shareholders, to treat personal and corporate assets as inseparable," said Zhiwu Chen, director of the Global Asia Institute at The University of Hong Kong commented, "Partly because controlling shareholders, especially founders, often treat company assets as personal property."

Evergrande Group this year nearly defaulted 3 times. Bonds Evergrande, Sunac China Holdings, Guangzhou R&F Properties, Shimao Group Holdings and CIFI Holdings Group all rose after news of support from the founders.

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