2023-09-27 15:25:35
The boss of Evergrande, a Chinese real estate giant with astronomical debt, is under house arrest, the Bloomberg agency said on Wednesday, as the group faces increased pressure from its creditors.
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The descent into hell continues for the Chinese group Evergrande. The boss of the real estate giant with colossal debt is under house arrest, the Bloomberg agency said on Wednesday, September 27, as the group faces increased pressure from its creditors.
Evergrande, whose setbacks regularly make the headlines, had a colossal balance at the end of June estimated at 328 billion dollars (307 billion euros).
The problems of the group, former number one in real estate in China, have for two years fueled distrust in a sector that has long been very lucrative but is now shunned, once morest a backdrop of economic slowdown and unfinished housing.
In recent months, this crisis of confidence has overtaken groups previously considered financially solid, such as Country Garden, one of Evergrande’s competitors.
According to Bloomberg, its founder, billionaire Xu Jiayin (also known by his Cantonese name Hui Ka Yan), was taken away earlier this month by the authorities and is under house arrest. The agency cites anonymous sources.
Xu Jiayin was the richest man in Asia in 2017, with a fortune estimated at $45.3 billion (€41.2 billion at current prices). Since the setbacks of his group, his wealth has declined considerably to reach 4.3 billion dollars (4 billion euros today) in 2022, according to the Hurun billionaires ranking.
Contacted by AFP, Evergrande did not immediately react.
The information, which has not been confirmed by an official source, nevertheless caused the group’s action to be unscrewed. Evergrande shares lost nearly 19% on the Hong Kong Stock Exchange on Wednesday.
The news comes at the worst time as a week of national holidays (October 1) approaches in China, a period generally conducive to real estate purchases.
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Series of arrests
Evergrande announced in mid-September the arrest of employees in one of its subsidiaries. The press release did not specify their number or what they are accused of. According to Caixin, a reputable business media outlet, two former Evergrande executives were also detained.
The alleged placement under house arrest of the boss of Evergrande further obscures the group’s horizon, following several disappointments in recent days.
A subsidiary of Evergrande announced on Monday that it was unable to repay interest on a loan, increasing pressure on the group before a meeting of its creditors in court scheduled for the end of October in Hong Kong.
The same day, Evergrande canceled a meeting on the restructuring of its debt without notice, to the great dismay of its lessors and accentuating the vagueness around its future.
The real estate sector in China has experienced meteoric growth in recent decades, in a country where the purchase of a property even before its construction makes it possible to finance other projects. But the groups’ debt has reached such levels that the authorities have decided to put an end to it from 2020.
Since then, access to credit has been considerably reduced for these groups, some of whom are now struggling to complete projects, fueling a crisis of confidence with potential buyers which is dragging down prices.
This unprecedented crisis in real estate has affected the other heavyweight in the sector, Country Garden, in recent months and is weakening more modest players. Promoter China Oceanwide warned this week that it was facing compulsory liquidation.
With AFP
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