Liu Luanxiong and Xu Jiayin have been entangled in grievances for ten years

Author | Cao Anxun

Edit | Zhang Xiaoling

In 2009, Evergrande was listed, and Hong Kong tycoons such as Liu Luanxiong, as the investors behind it, appeared together with Xu Jiayin, chairman of Evergrande, who laughed and was full of spirit.

14 years later, Xu Jiayin has been taken away for investigation, Liu Luanxiong and his wife Gambi are not going well, investing in Evergrande stocks and losing tens of billions of Hong Kong dollars, and the undercurrent of family property is surging.

On November 10, Liu Luanxiong held a press conference, bluntly saying that he "does not blame Xu Jiayin" for his losses, and the grievances and entanglements between Hong Kong's wealthy circle and Xu Jiayin have once again surfaced.

What makes people sigh is that as a poker friend who played cards at the same table in the past and a business partner on the platform for Evergrande's listing, the two have cooperated many times to make a lot of money, and now, in addition to the sentence "don't blame Xu Jiayin", Liu Luanxiong has been silent.

The years when they did business together and made a lot of money were a good time to catch up with the real estate bull market, but now, with the passing of the golden age of real estate, Xu Jiayin and Liu Luanxiong and other Hong Kong tycoon circle mates have not been able to resist the invasion of the cycle, and gradually dispersed and drifted apart.

That era of boiling oil with fire and running blindfolded is impossible to chase after all.

Join the Bureau

Hong Kong billionaire, stock market sniper, actress harvester... , Liu Luanxiong, the former chairman of Chinese Real Estate, who has a number of names in one, can attract the public's attention every time he appears.

The press conference on November 10 was held to clear up the rumors. Previously, it was rumored that he changed his will because he was angry that his wife Chen Kaiyun (Gambi) lost 20 billion in Evergrande.

"I don't blame Xu Jiayin, nor do I blame Gambi, in fact, my wife and her sister suggested that I sell Evergrande shares, and I said that if I sell, Xu Jiayin will definitely fall faster, because the information must be disclosed in advance before selling. Liu Luanxiong said.

In August 2021, Chinese Estates began to sell Evergrande shares in batches, which have not been sold out so far. According to its report, as of the end of June 2023, it still holds a small number of Evergrande shares, with a book value of about HK $62.336 million.

During the conversation, Da Liu faintly revealed that he had a good relationship with Xu Jiayin.

Back to 15 years ago, Evergrande's listing encountered a financial crisis, and Xu Jiayin turned to the wealthy in Hong Kong for help several times, which changed his fate.

At that time, under the recommendation of Yang Shoucheng, chairman of Emperor Group, Xu Jiayin entered the circle of Hong Kong's richest people. After playing cards with Zheng Yutong, the founder of New World Development, for three months, the old man, together with the Kuwait Investment Authority, Deutsche Bank and other institutions, spent $506 million to invest in Evergrande, and also attracted others such as Liu Luanxiong.

Since then, at the card table and in the shopping mall, Xu Jiayin has started a decade-long relationship with the Hong Kong rich circle.

The most well-known one is that in October 2009, at Evergrande's listing investment promotion conference in Hong Kong, Zheng Yutong, Liu Luanxiong, Yang Shoucheng, Zhang Songqiao, chairman of Zhongyu Land and others rarely appeared collectively.

In this way, with the endorsement of Hong Kong's wealthy circle and the support of real money, on the day of listing, Evergrande became the largest private real estate enterprise in China by market value at that time with HK $70.5 billion. Xu Jiayin, who holds 68% of the shares, also soared to HK$48 billion, becoming the richest man in Chinese mainland for the first time.

This is the highlight moment of Xu Jiayin and the Hong Kong rich circle, and it is also the projection of the golden age of real estate on a group.

Xu Jiayin and the Hong Kong billionaire circle bet on Evergrande, bet on the mainland property market, is in the 2009 after the overall rapid development of the property market in the decade, benefiting from the acceleration of urbanization, Evergrande and other real estate companies quickly enclosed the listing, the head of the real estate companies also most of the stock price performance is good.

In the following ten years, taking advantage of the east wind of the times, Xu Jiayin's business territory continued to grow through real estate to increase leverage and support the listing of automobiles and properties.

Hong Kong's tycoons are also with them. Through their Chinese Real Estate, Liu Luanxiong and his wife have spent a total of 10 billion Hong Kong dollars to buy Evergrande shares, and once became the second largest shareholder after Xu Jiayin, holding about 8% of Evergrande's total share capital. They also invested in Evergrande Property and Evergrande Automobile in 2020 and 2021, with investments of up to HK$4.5 billion and HK$3 billion respectively.

In 2016, after Zheng Yutong passed away and Xu Jiayin rushed to Hong Kong from the mainland to see him off, Cheng Kar-chun continued the friendship between the family and Xu Jiayin, subscribing to Evergrande Property and RV Bao in 2020 and 2021, spending HK $500 million and HK $510 million respectively.

Xu Jiayin also supported these old friends. According to incomplete statistics, in 2015, he spent more than 60 billion yuan to take over the projects of Zheng Yutong, Liu Luanxiong, Zhang Songqiao and others in the mainland to help the latter cash out.

They also work closely together on other business events. In August 2016, during the Baowan dispute, Xu Jiayin spent 36.2 billion yuan to raise Vanke to intervene in the Vanke equity dispute, and Zheng Yutong also bought Vanke H shares through Dingpu Securities, which is considered to be a response to Xu Jiayin's move.

Xu Jiayin and Liu Luanxiong also cooperate frequently. For example, in November 2015, Evergrande bought a building on the edge of Victoria Harbour from Liu Luanxiong for HK$12.5 billion, 38 Gloucester Road, Wan Chai, Hong Kong, and listed it as the "China Evergrande Center".

Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, said that Xu Jiayin and Hong Kong's wealthy circle have performed well from 2009 to 2017, especially in investing in Evergrande stocks.

For example, in 2017, Evergrande shares rose sharply, and the cumulative maximum floating profit of Evergrande shares held by Chinese Real Estate and Liu Luanxiong reached 10 billion Hong Kong dollars.

Chen Xin, a professor at Shanghai Advanced Institute of Finance of Shanghai Jiao Tong University, pointed out that in 2009, when the country relaxed the monetary policy and the real estate market rebounded sharply, Xu Jiayin took this opportunity to raise a total of 5.64 billion Hong Kong dollars in IPO, alleviating debt pressure and increasing leverage to achieve temporary success.

Floatation

The story of the world has always been that we share wealth and prosperity, and we share hardships and hardships.

As their influence in the mainland property market grew, Hong Kong's wealthy circle began to keep a low profile.

However, Evergrande has entered a big gamble of increasing leverage. In Chen Xin's view, over the years, Xu Jiayin has used the promise of high returns to bind institutional investors, friends, suppliers, and even executives and employees to his "chariot".

Liu Luanxiong's family is also one of them.

However, when the golden age of real estate has faded in recent years, sales have been sluggish, and the industry has to struggle to "survive", the highly leveraged Evergrande has been harshly tortured by the capital market and cash flow, and the way to make money by investing in Evergrande stocks is no longer feasible.

Evergrande's financial report shows that since 2021, Evergrande's net assets have turned from positive to negative, and it has become insolvent.

Since then, Evergrande's stock has fallen again and again, and as of November 15, the market value has fallen from a peak of HK$379.5 billion to HK$3.697 billion, a decrease of 97.41%.

This has directly affected the earnings of Hong Kong's wealthy circle, and in August 2021, on the eve of Evergrande's open market default, Chinese Estates began to liquidate Evergrande shares at a low level.

As of the end of 2021, Chinese Real Estate announced that the company had realized a partial loss of about HK $7.87 billion and an unrealized part of the loss of about HK $3.05 billion. With the market value of Evergrande Property and Evergrande Automobile plummeting and becoming penny stocks, Liu Luanxiong's related investments have undoubtedly been greatly damaged.

However, if you count the properties that Chinese Real Estate sold to Evergrande, Liu Luanxiong may not lose money on the whole.

Looking back from the long river of history, the grievances and entanglements between Liu Luanxiong and Xu Jiayin also correspond to that sentence, the times create heroes, and heroes also need to be timely.

Bai Wenxi said that Liu Luanxiong and his wife's loss of 10 billion Hong Kong dollars from Evergrande investment is closely related to the cyclical changes in the real estate industry and the past of the golden age.

In the past few years, the real estate market has undergone drastic adjustments, the real estate investment environment has become complex and uncertain, the operating pressure of real estate companies has increased, and the number of thunderstorm real estate companies has increased.

The golden age of local real estate has come to an end, and the highlight moment of Xu Jiayin and Hong Kong's wealthy circle investing in Evergrande has also gone.

Running a business is a long journey, not a gamble. Evergrande once stood at the cusp of the times, but when the wind blew, it fell due to full leverage and regardless of risks, and its own management and financial control were also extensive and improper, which should have been easily identified by professional investors, but Liu Luanxiong obviously did not do more consideration.

Now, five or six years later, the former Hong Kong rich circle has become a different situation, and they rarely appear in public again.

However, as Hong Kong's top wealthy family, the relevant investment in Xu Jiayin is not enough to break their bones, and they are still active in their respective fields.

Speaking at a press conference, Liu Luanxiong said that Gambi earned HK$20 billion through art collections, and Cheng Zhigang, the grandson of Cheng Yutong, also led New World Development to turn losses into profits in the third quarter, with performance growth, and last year also said that it would invest 10 billion yuan in the mainland in the coming year.

The world is impermanent, and the rivers and lakes are ups and downs. Xu Jiayin's past with Hong Kong tycoon and Liu Luanxiong also shows that long-term wealth inheritance and success cannot only rely on personal connections, but also on their own strength.