The moon on the day of the Mid-Autumn Festival is really big and round.
Boss Xu was controlled the day before the Mid-Autumn Festival and missed the moon of this year's Mid-Autumn Festival, is it emotional, it's good to be an ordinary person.
Evergrande's share price also increased from 28 in July 20205 Hong Kong dollars fell to 1HK$8, down more than 93%. In the face of such data, we can't help but ask, how did Evergrande get to this point?What bad things did Xu Jiayin do, and, Evergrande 2Where did the 4 trillion go?Whose money is it losing?
In this article, I will try to analyze Xu Jiayin's wrong decisions and behaviors from the following four aspects:
part.1
1. Through the VIE structure, Evergrande transferred its equity overseas, from a controlling shareholder to a creditor, in an attempt to use the bankruptcy protection of the US courts to evade China's accountability.
Xu Jiayin transferred Evergrande's equity overseas through the VIE structure. What is the VIE architecture?To put it simply, it is a model for cross-border investment and operation through contractual control rather than equity control. Xu Jiayin used this structure when he listed Evergrande in Hong Kong in 2010. Through a series of complex contractual arrangements, he transferred Evergrande's real estate business in China to a company registered in the Cayman Islands, Evergrande Group***, hereinafter referred to as the "Cayman Company"). Xu Jiayin, on the other hand, holds the majority of the shares of the Cayman company through a company registered in the British Virgin Islands, New Century Investment***, hereinafter referred to as the "Virgin Company").
His aim is to gain more international capital support through a Hong Kong listing and improve Evergrande's valuation and financing capabilities. By registering a company overseas, enjoy lower tax rates and more relaxed regulation, reducing Evergrande's costs and risks. Then, through contract control, adjust Evergrande's equity structure at any time and increase its own voice and income rights. At the same time, by transferring assets overseas, they circumvent China's laws and policies to protect their own interests and security.
part.2
Second, the use of high-interest US dollar bonds to transfer capital from China to overseas has led to Evergrande's debt ratio remaining high.
Evergrande has carried out a series of capital operations in a high-risk manner. Xu Jiayin obtained US dollar loans by using domestic real estate as collateral from domestic banks, and then used these dollars to issue high-yield bonds, which were purchased or distributed to internal associates, and eventually the funds were pocketed by himself. In addition, Evergrande has also conducted some loss-making businesses overseas, which is considered a means of transferring wealth.
However, when the debt became too late to be repaid, Heng ** sought bankruptcy protection in an attempt to shift the liability to the bank that provided the guarantee. But banks can't use those properties because they belong to the buyers,** and society has a responsibility to protect them. So, in the end, these debts will be borne by the state and ordinary people.
This series of operations essentially turns domestic assets into liabilities, and overseas dollars into personal wealth, leaving the risk to the banks and owners. This strategy can be said to hide the debt at home and transfer the potential risk overseas. This is the so-called debt at home, money abroad.
part.3
3. Blind expansion, involving in many fields, such as automobiles, football, mineral water, etc., resulting in the tension of Evergrande's capital chain and the aggravation of losses.
Evergrande is one of China's largest property developers, but in recent years, it has also ventured into multiple sectors, such as automobiles, football, mineral water, health, education, etc., in an attempt to build a diversified industrial empire.
According to statistics, Evergrande has invested 15 billion yuan in football, 47.4 billion yuan in automobiles, 5 billion yuan in mineral water, 10 billion yuan in health, and 20 billion yuan in education.
Evergrande's investment logic in these areas is based on the prediction of the real estate market and the pursuit of emerging industries. However, Evergrande's performance in these areas has not been satisfactory, and there have even been serious losses and difficulties.
The blind expansion of these areas has led to the tension of Evergrande's capital chain and the intensification of losses. In order to maintain the operation and development of these areas, Evergrande has to frequently borrow and sell assets, resulting in Evergrande's debt ratio remaining high. As of June 2020, Evergrande's interest-bearing debt balance reached 835.5 billion yuan, and the debt ratio reached an astonishing 87%. Moreover, Evergrande's losses in these areas have also directly dragged down Evergrande's performance. In the first half of 2021, Evergrande's revenue was 2226900 million yuan, down 16 percent year-on-year5%；net profit was 10.5 billion yuan, down 29% year-on-year. Among them, Evergrande's real estate business recorded a loss of about 4.1 billion yuan, and the new energy vehicle business lost about 4.9 billion yuan.
part.4
Fourth, luxury and erosion, arranging luxurious living treatment for themselves and Evergrande's senior management, ignoring Evergrande's core business and customer interests.
Let's take a look at Xu Jiayin's luxurious life (online biography):
He spent 67 million euros to buy a ship called"event"This mega luxury yacht has been built exclusively by top Dutch designers.
With two Rolls-Royce Phantoms, one on the left hand and the other on the right drive, both cars have been in use for more than a decade.
He once purchased a private jet for the Evergrande football team, and he personally owns two planes – Gulfstream G45 and Airbus A319 – at a total cost of $10700 million.
Overseas, he owns a mansion at 2-8A Roland Kate in London, England, which is rumored to be worth up to 4 billion.
In addition, he also owns a top mansion worth 1.6 billion in London, and the former owner is said to be the Saudi royal family.
In China, there are not a few of his mansions, including the Yujing Peninsula Villa in Guangzhou and the No. 1 luxury residential area in Shenzhen Bay.
The extravagant life of Evergrande's executives.
Evergrande's internal management is quite extravagant, and a detailed business trip service for Evergrande executives has been circulated on the Internet, which is jaw-dropping. The detailed rules set out in detail the requirements of Xu Jiayin, chairman of the board of directors of Evergrande Group, and other senior executives when they traveled, and all of them reflected their extravagance and extravagance in terms of accommodation, transportation, catering, and leisure.
In terms of accommodation, they require a five-star hotel or luxury villa, the room must be a suite or ** suite, and even the house number must meet the feng shui requirements. Toiletries, razors, massagers and other necessities are available, as well as a variety of fruits, snacks, honey water, etc., and some have designated massages and beauty services.
In terms of transportation, luxury cars or commercial vehicles are required to pick up and drop, and the brand has strict regulations, such as Xu Jiayin only takes Mercedes-Benz S600 or BMW 7 Series. Bodyguards, private jets or yacht trips are commonplace, enjoying aristocratic treatment.
Catering requires a high-end restaurant or private dining room, and the dishes must meet personal taste and health requirements. Some executives have special dietary Xi, such as eating only imported fruits, drinking only imported honey, and even importing cutlery.
In terms of leisure, executives show their own advantages, some play cards, some enjoy movies, some shop and travel, and some soak in hot springs and do spa. Without exception, they all demand the most distinguished service and the most comfortable environment. In the past, when the real estate boom was in full swing, they worked hard to build it, but now that the building has collapsed, it is recommended that this detailed rule be sent to the prison so that they can continue to "enjoy the service".
Whose money does Evergrande owe?
As one of the largest real estate developers in China, Evergrande involves a large number of creditors and debtors, and different types of debt have different repayment orders and risk levels. According to the financial data previously released by Evergrande, Evergrande's arrears can be roughly divided into five categories: home buyers, investors, construction units and merchants, financial institutions, and banks.
Among Evergrande's creditors, the most unlucky people may be ordinary investors who have purchased wealth management products issued by Evergrande's wealth platform. Many of these investors are employees, owners, relatives and friends of Evergrande, who were induced or forced by Evergrande's executives or salespeople to use their own savings or loans to purchase wealth management products issued by Evergrande's wealth platform.
There are also those owners who have purchased unfinished buildings, as well as partners who have been on credit with Evergrande over the years, and the debt of 700 billion + 1 trillion has fallen into the deep predicament of many families and partners.
The 50 billion dividends shared by Boss Xu are foreign exchange, which is overseas property and cannot be supervised domestically.
Recent news reports indicate that Mr. Xu's ex-wife, Ding Yumei, left Hong Kong by plane in July after learning that Mr. Xu was under border control, and her whereabouts are unknown. In addition, Xu Jiayin set up a family trust of 3.2 billion yuan earlier**, leaving a way back for his family.
Professor Xu used his own experience to give a big lesson in management to the students.