Xu Jiayin had a premonition of the "Mid-Autumn Festival Tribulation": his ex-wife had gone abroad, and his son trusted him to protect his body
The "borrow the new for the old" game crashes.
Author | Liu Qinwen Pu Su
Editor丨Gao Yan
Source | Mustang Finance
Seeing him rise high, watching him banquet guests, seeing his building collapse. Evergrande's "building" really collapsed this time.
On the evening of September 28, China Evergrande (03333.HK) announced on the Hong Kong Stock Exchange that Xu Jiayin, chairman of the board of directors, has been taken compulsory measures in accordance with the law due to suspected violations and crimes. Trading in China Evergrande shares will continue to be suspended until further notice.
Source: Evergrande announcement
According to "First Financial News", Xu Jiayin's second son Peter Xu was also taken away for investigation. Its last attention was in December 2021, when it was revealed by foreign media that it sold a mansion on Sunset Boulevard in Los Angeles for a discount of $12.5 million. Within Evergrande, Xu Tenghe first presided over the business of the Pearl River Delta branch, and later transferred to the general manager of Evergrande Wealth, responsible for specific business.
Before the above news was announced, Evergrande was one of the three major listed companies: China Evergrande (3333. HK), Evergrande Property (6666. HK), Evergrande Auto (0708. HK) has collectively suspended trading before the market opens on September 28, and seems to be waiting for the release of this blockbuster news.
Before the suspension, speculation about the personal situation of Xu Jiayin, chairman of China Evergrande, had already attracted market attention, and people familiar with the matter told the media that Xu Jiayin could not be contacted in recent days.
Meanwhile, Evergrande Real Estate Group Co., Ltd., a major subsidiary of China Evergrande, is also under investigation, and there are sources that more former executives may be involved.
IPG Chief Economist Bai Wenxi analyzed, "Generally speaking, private entrepreneurs and their senior managers may be involved in the crimes of illegal operation, illegal absorption of public deposits, illegal fundraising, fraud, tax evasion, embezzlement of funds and illegal embezzlement, and Xu Jiayin and the arrested executives of Evergrande are no exception." ”
Previously, Xu Jiayin and his wife Ding Yumei had been at risk of technical divorce isolation, and according to "Tencent News Periscope", Ding Yumei had flown out of Hong Kong in late July. It is also reported that before Xu Jiayin declared Evergrande's bankruptcy, he set up a single-family trust fund worth up to 2.3 billion yuan for his son, known as Xu Jiayin's "rich second-generation protection plan" for his son.
"Technical" divorce before being taken away, filing for bankruptcy protection in the United States
The marriage of Xu Jiayin and his wife Ding Yumei appeared "cracks" in front of the public on August 14, 2023. According to the announcement issued by China Evergrande on the same day, Ding Yumei's title changed from "Mrs. Xu" to "a third party independent of the company and its affiliates". The saying about "Xu Jiayin's divorce" also appeared.
Previously, Xu Jiayin had expressed his gratitude to his wife in public many times, and for the divorce of the two, some commented that Xu Jiayin's divorce was more formal than practical. However, one thing is clear, through the divorce, the assets in Ding Yumei's name are temporarily preserved, and in addition, because there is no Xu Jiayin's spouse status, some future related party transactions will not be restricted by law.
As the actual controller, Xu Jiayin's divorce was kept secret, which is suspected of violating the letter and covering.
On the evening of August 16, Evergrande Real Estate Group issued an announcement that it had received the "Notice of Case Registration" issued by the China Securities Regulatory Commission due to the company's suspected information disclosure violations and violations.
In addition, according to "Phoenix Net", Xu Jiayin's son was also exposed to receive a single-family trust fund with an amount of up to 2.3 billion yuan before Xu Jiayin declared the bankruptcy of Evergrande's property, which is also known as Xu Jiayin's "rich second-generation protection plan" to his son
The divorce turmoil has not yet passed, and another news from Evergrande has fallen. On August 17, Evergrande filed for bankruptcy protection in the United States.
Under Chapter 15 of the U.S. Bankruptcy Code, U.S. assets can also be protected when a business undergoes reorganization arrangements elsewhere. Records from the Manhattan bankruptcy court also show that Evergrande's subsidiaries Tianji Holdings and Jingcheng also filed for Chapter 15 bankruptcy protection on August 17.
Evergrande Group mentioned since the application that restructuring procedures are underway in Hong Kong and the Cayman Islands, and the company has been working for months to finalize offshore debt restructuring plans.
"Evergrande's application for bankruptcy protection in the United States actually prevented all domestic creditors from asserting their rights, and they took the lead in repaying US dollar debts into their own pockets after selling high-quality assets." A principal researcher at Chenghong Research said, "This trick is very desperate, the purpose is to leave the debt to the country, and the income to yourself." Some people also think that the analysis of the chief researcher of Chenghong Research is not quite correct, in his opinion, Xu Jiayin's biggest problem may be the suspected illegal absorption of public deposits.
Source: Weibo
According to the 21st Century Business Herald, a senior observer in the field of corporate governance pointed out that on the cusp of great pressure from all parties, Xu Jiayin shouted slogans to deceive creditors, but had already carried out a "silent technical divorce" with Ding Yumei. Due to the arrangement of Evergrande Group's listing in Hong Kong through the "small red chip" structure, of the more than 90 billion yuan of accumulated dividends paid by Evergrande Group, the offshore companies in the British Virgin Islands and Cayman Islands, which were controlled 100% by Xu Jiayin and Ding Yumei, respectively, received most of the dividends through China Evergrande and transferred them overseas before and after the accident, and finally fell into the pockets of Ding Yumei, the "overseas ex-wife" through the operation of "technical divorce".
It has been established for 33 years and has a debt of 2.4 trillion yuan, and Xu Jiayin will have to pay it back sooner or later
"Without the good policy of opening up the country, there would be no Evergrande today, so everything between me and Evergrande is given by the party, the state, and the society." Xu Jiayin, chairman of the board of directors and secretary of the party committee of Evergrande Group, made this speech at the 10th "China Charity Award" commendation meeting, which was widely disseminated and is now embarrassing.
Xu Jiayin, born on October 9, 1958 in Gaoxian Township, Taikang County, Zhoukou City, Henan Province, said that this is "a very poor place in Yudong, Henan", and recalled his poverty experience many times, his mother died of illness at the age of 1 year and 3 months, and Xu Jiayin, who was half an orphan, grew up eating sweet potatoes and sweet potato noodles.
Xu Jiayin said, "After graduating from high school, I wanted to find a job moving bricks for 10 yuan a month, but I couldn't find it. ”
After resuming the college entrance examination, Xu Jiayin was admitted to the metallurgical department of Wuhan Iron and Steel Institute majoring in "metal materials and heat treatment", and after graduation, he was assigned to work in Henan Wuyang Iron and Steel Company, and then promoted to the workshop director of the heat treatment workshop under the rolling mill of Henan Wuyang Iron and Steel Company, and won many awards.
Xu Jiayin and his wife Ding Yumei also met at that time.
In 1992, Xu Jiayin was investigated for selling the company's scrap and improving the welfare of employees, causing him to leave Wuyang Iron and Steel Company, and in the same year, he joined Shenzhen Zhongda Group and was promoted to the director of the office.
Subsequently, Xu Jiayin opened up the Guangzhou real estate market for Zhongda Group in 1994 and executed the first real estate project "Zhudao Garden", which netted Zhongda Group 200 million yuan.
In 1996, Xu Jiayin left Zhongda Group and founded Evergrande Industrial Group Company, and Xu Jiayin's destiny gear began to officially turn since then.
Source: Corporate website
In 1997, the first real estate developed by Xu Jiayin Company, Jinbi Garden, was sold out within two hours, with sales of 80 million yuan, becoming the first pot of gold that Xu Jiayin started. In 1999, Evergrande Real Estate stood out from more than 2,000 Guangzhou real estate enterprises and became one of the top 10 real estate enterprises in Guangzhou.
From 2006 to 2008, Xu Jiayin completed the national layout in two years, the company's projects developed from 2 to more than 50, and Xu Jiayin also became the richest man in Guangzhou.
In 2013, Evergrande exceeded 100 billion sales for the first time; In 2016, Evergrande ranked among the world's top 500 and became the world's first real estate sales enterprise.
Since then, Xu Jiayin's Evergrande began to expand across industries, establishing the "Evergrande Ice Spring" brand in 2013, taking charge of Evergrande Finance in 2016, entering the new energy automobile industry in 2019, and then to Evergrande football, Evergrande property, etc., Xu Jiayin's financial empire expanded rapidly.
Source: Corporate website
And his personal wealth has also continued to accumulate, with a maximum wealth of 235 billion yuan, ranking 5th in the "2020 Hengchang Roasting Fang Hurun Report".
In the 25 years from 1996 to 2020, Xu Jiayin was at the forefront of fortune and frequently appeared on the rich list.
Ren Zeping resigned without success, and the game of "borrowing the new and paying for the old" can no longer be played?
While Xu Jiayin's personal wealth is accumulating, Evergrande's debt is increasing, and finally the debt exploded in 2021, and since then, the topic of Evergrande's "2 trillion debt" has been frequently reported.
After the supplementary financial reports in 2023 were disclosed one by one, people found that Evergrande's total liabilities were as high as 2.39 trillion yuan, and the total loss in 2021~2022 exceeded 800 billion yuan.
Evergrande's restructuring plan has also not been smooth. On September 22, China Evergrande issued an announcement that due to the sales performance falling short of expectations, the Evergrande restructuring consultation meeting originally scheduled for September 25-26 was cancelled, and the restructuring terms would be announced separately if they were adjusted;
After the cancellation of the restructuring meeting, on September 24, Evergrande continued to announce that the new notes originally planned to be issued did not meet the issuance qualifications because its main subsidiary, Evergrande Real Estate Group Co., Ltd., was under investigation.
To simply understand that issuing notes is to borrow new debt to fill the old pit. Not meeting the issuance qualifications means that Evergrande has basically fallen in the first step of restructuring.
China Evergrande's restructuring plan involved approximately US$19.15 billion in US dollar bonds. According to China Evergrande's 2023 half-year report, its total surviving US dollar senior notes are about US$20.117 billion.
Source: Evergrande financial report
As of the first half of 2023, China Evergrande's total liabilities were approximately RMB2.39 trillion, excluding contractual liabilities, the size of liabilities was approximately RMB1.78 trillion, while cash and cash equivalents (including restricted funds) for the same period were approximately RMB13.38 billion.
In fact, a series of situations in Evergrande today, Ren Zeping, who has worked in Evergrande, has already put forward the idea of reducing leverage, but it has not been adopted.
In December 2017, Evergrande hired economist Ren Zeping with an annual salary of up to 15 million yuan to serve as the chief economist of Evergrande Group and the president of the Evergrande Economic Research Institute. Responsible for macroeconomic analysis, market development direction and industry development trend research, for the company's decision-making to provide relevant analysis reports.
Ren Zeping described his work at Evergrande in eight words, "Words are useless, and it is difficult to integrate." ”
On October 11, 2021, August 19, 2022, October 6, and September 1, 2023, Ren Zeping successively published "advice, truth and a few words from the heart" on his public account "Zeping Macro".
Source: "Zeping Macro" public account
"I joined Evergrande in December 2017 with the intention of studying real estate and private enterprise operations closely as an economist, and I didn't know much before. Not long after joining the company, Evergrande's debt ratio has risen sharply to 86.25%, and it plans to diversify and expand significantly. ”
Ren Zeping said in the article that from February to April 2018, the company report provided by his leader Evergrande Research Institute clearly put forward advice: "Preventing and resolving major risks is the first of the three major battles in the next three years, and no market entity should take chances." "We may be entering a new stage of real estate development, and we must fully estimate the determination and impact of a series of major measures such as 'housing without speculation', long-term mechanisms, and rent-purchase simultaneously, so as to change concepts and deepen transformation."
But Ren Zeping's suggestion was not only not adopted, but people were also scolded bloodily. "I was criticized at a meeting of company executives for my advice on reducing debt and opposing diversification, and I was criticized for a long time, which roughly means that I don't have enough to understand the company's major strategy. Many of Evergrande's executives and employees know this. When I first joined, I was going to make a difference, but I encountered a setback, which hit me a lot, and many people, including me, didn't know enough about the corporate culture. ”
In the second half of 2020, Ren Zeping believed that he had made due advice and efforts, coupled with the determination and strength of judging that the state was very determined and strong in regulating real estate, and the era of real estate was about to pass, he was more suitable for academic research and proposed his resignation to Evergrande.
"Evergrande considered that I was a public figure and retained me to avoid brand influence. Since my determination to leave my post was made, it was finally approved in March 2021. In March 2021, Ren Zeping officially announced his departure from Evergrande and joined Soochow Securities as chief economist.
The Evergrande problem is over, Xu Jiayin is arrested, who will guarantee the handover of the building?
Recently, Evergrande's "negative" news has continued continuously.
First of all, the executives of Evergrande Wealth and Evergrande Life have been taken compulsory measures or taken away to assist in the investigation, and China Evergrande also urgently issued a statement saying that the above two companies are indirect wholly-owned subsidiaries of China Evergrande and 50% shareholding companies, respectively, and do not affect the company's operations.
In August 2023, Evergrande Wealth was listed as a dishonest executor due to its ability to perform and refused to perform its obligations under effective legal documents.
On September 16, 2023, the WeChat public account of "Shenzhen Nanshan Public Security" released the "Case Facts": "Recently, the public security organs have taken criminal compulsory measures against suspected criminal personnel such as Du of Evergrande Wealth Company in accordance with the law. ”
Source: "Shenzhen Nanshan Public Security" WeChat public account
The personal information of "Du of Evergrande Wealth Company" has not been released, but public information shows that the legal representative, executive director and general manager of Evergrande Wealth is Du Liang.
As of December 31, 2022, Evergrande Wealth had a total of approximately RMB34 billion in outstanding principal and interest.
"Yicai" reported that Xu Jiayin's second son Peter Xu is the general manager of Evergrande Wealth, responsible for specific business. It was also recently taken away for investigation.
In 2023, Evergrande Wealth changed the payment plan several times because it could not maintain payment according to the original payment plan, until the evening of August 31, Evergrande Wealth issued a document saying that the company could not carry out this month's payment because the company's asset disposal progress was not as expected and the asset disposal funds were not obtained. Subsequent payment arrangements will be announced separately.
In addition, on September 21, a number of media reported that Zhu Jialin, acting chairman of Zhongrong Life and former chairman of Evergrande Life, was taken away for investigation and was in a missing state.
According to public information, Zhu Jialin became the president of Evergrande Financial Group in September 2017 and the chairman of Evergrande Life from July 2018 to October 2019.
At present, the insurance business and corresponding assets and liabilities of Evergrande Life Insurance Co., Ltd. have been determined to be transferred by Harbour Life Insurance Co., Ltd. as a whole.
Does a series of negative news and the collective suspension of trading of Evergrande's three listed companies mean that there is heavier news to be released than before? We'll see.
However, in addition to the above news, some new actions of Evergrande Property and Evergrande Auto seem to have been ignored.
First of all, Evergrande Automobile's "Hengchi 5" appeared at the Tianjin International Auto Show on September 28, and it can continue to participate in the exhibition, at least it shows that Evergrande Auto is still insisting on normal operation.
Source: Evergrande stock bar
Secondly, Evergrande Property changed its independent director on September 27, and Dong Xinyi, 53, was appointed as an independent non-executive director of Evergrande Property, the chairman of the remuneration committee, and became a member of the audit committee and nomination committee, with real voting rights.
Dong Xinyi's previous positions in the Guangdong branch of China Orient Asset Management Corporation, one of the four major AMCs in China, and Dongyin Development (Holdings) Co., Ltd., a wholly-owned subsidiary in Hong Kong, are reminiscent.
At the beginning of 2022, Evergrande's annual delivery plan is to deliver 600,000 sets and about 70 million square meters. Up to now, Evergrande's guaranteed delivery has only been completed by more than 50%, and half of it is still in ruins. After Xu Jiayin was arrested, who will be responsible for the delivery guarantee?
According to the "Phoenix Network Wind Financial News" report, Evergrande people said that no matter what the group level is, the key work of regional companies is indeed to ensure the delivery of buildings, and many regions have (government) special classes to guide this matter, promote the revitalization of assets and complete the delivery of Evergrande projects, and some regions have also carried out cross-regional mortgage financing to promote the task of guaranteeing the delivery of buildings.
Wang Yuchen, director of Beijing Jin Law Firm, also analyzed that Evergrande has many subsidiaries across the country, and each company is relatively independent. Therefore, for buyers who bought Evergrande's unfinished buildings, as well as investors who invested in Evergrande, they need to pay close attention to Evergrande's next direction. But don't worry too much, since the state has intervened and so many people are involved, there should be a corresponding solution in the end. But I strongly recommend that those who illegally misappropriate pre-sale funds lead to the end of the business.
With the passage of time, Evergrande Wealth, Evergrande Real Estate, Evergrande Life, Evergrande Property and Evergrande Auto under Evergrande have gradually moved towards different destiny routes, and some of these companies may welcome new owners. What other issues do you think Evergrande needs to pay attention to? Welcome to leave a message in the comment area to discuss.