Xu Jiayin, a man of the year in the business arena in China and even in the world, has always attracted much attention for his capital manipulation methods. Today, let's take a closer look at his capital operation strategy and the purpose behind it.
First of all, we have to mention the $1.8 billion bond issued by Jingcheng ***, an offshore subsidiary of Evergrande Group, on the Singapore Exchange. In this transaction, a BVI company called Xinxin Limited became a high-profile buyer. This company is the entity controlled by Xu Jiayin. He personally subscribed for more than $1 billion in Evergrande bonds, accounting for almost half of the issue. This can't help but make people ponder, as the chairman of a large company like Evergrande, why did he subscribe to his own corporate bonds on such a large scale?
At the same time, we cannot ignore that behind Evergrande's continuous dividend to shareholders in the past few years, Xu Jiayin's overseas dividends have reached more than 10 billion Hong Kong dollars. The funds flowed into his BVI company, Xinxin Limited. So, why did Xu Jiayin continue to buy Evergrande's own dollar bonds after receiving such a huge dividend? Especially when Evergrande's cash flow has shown signs of danger and it has begun to borrow new debts to repay old debts?
We can interpret these issues from multiple perspectives. First of all, from a market perspective, a major shareholder's subscription of a portion of his own corporate bonds can be seen as a sign of confidence in the company's future. This can not only enhance the company's market image, but also provide certain support for the company's financing activities.
Secondly, from a financial point of view, Xu Jiayin's overseas dividends and purchase of Evergrande bonds obtained by holding Evergrande** can be regarded as a capital operation strategy. In this way, he can not only use the Hong Kong dollar dividends obtained to purchase the company's bonds, but also realize the reuse of funds; At the same time, bonds, as a debt instrument, can reduce the company's asset-liability ratio and optimize the financial structure.
However, such an operation also raises some questions. Some people think that this is Xu Jiayin's transfer of overseas assets and hollowing out Evergrande. But a careful analysis shows that there are actually many doubts about these doubts. First of all, Evergrande dividends have transferred assets overseas, and Xu Jiayin holds Hong Kong dollars. So why did he buy Evergrande bonds again? Secondly, Evergrande's cash flow had already shown danger signals at that time, why did Xu Jiayin pull his friends to buy Evergrande bonds together?
One possible explanation for these problems is that when Evergrande had credit problems, he supported it by buying his own company's bonds. Since the interest rate on the bonds issued by Evergrande is very high, the interest rate on the bonds he personally purchased has also reached 13% and 1375%, which was the highest level in the market at the time. Such bonds with high interest rates often mean that the issuer has a poor credit profile and needs to pay higher interest to attract investors. Xu Jiayin's choice to buy Evergrande bonds at this time is likely to stabilize the market's confidence in Evergrande and provide financial support for Evergrande through his own purchase.
In addition, it may also be to expand market influence and further stabilize and enhance the market confidence of Evergrande bonds. This strategy is not uncommon in the capital markets, and many companies and major shareholders will take similar actions at critical moments to maintain the stability and credibility of the company.
Xu Jiayin not only lent money to Evergrande out of his own pocket, but also borrowed money from Evergrande at high interest. Such an approach undoubtedly increases the financial risk of the enterprise. But what is even more shocking is that he converted his equity into bonds by buying his own bonds. This means that when Evergrande encountered difficulties, Xu Jiayin's debt repayment priority was raised. In the event of Evergrande's bankruptcy and liquidation, there may be no equity left, but it is still possible that his bonds will be partially repaid.
What is even more thought-provoking is that Xu Jiayin and his friends have obtained a high yield of more than 10% by buying a large number of Evergrande's high-interest US dollar bonds abroad. This has not only increased Evergrande's debt pressure, but also made Evergrande more dependent on external financing.
In this process, Evergrande's role seems to have become a sinking giant ship. Xu Jiayin sells the valuable items on the ship while trying to escape from the sinking ship. This approach can't help but remind people of a saying: the thief shouts to catch the thief.
On the other hand, the success of this wave is largely due to the fact that it is compliant in every region. This reveals a deeper problem: international tax avoidance and capital games often take advantage of differences or loopholes in the rules between different countries. It's a cat-and-mouse game, with players looking for loopholes in the rules and countries trying to plug those loopholes.
Places like the BVI and the Cayman Islands have even contributed to this unhealthy trend to a certain extent, providing a breeding ground for tax avoidance and capital flows. This has undoubtedly exacerbated the gap between rich and poor and inequality on a global scale.