Founder and President Evergrande, the Chinese real estate giant, on the verge of collapse, got the equivalent 6.8 billion euros in dividends retrieved from the company since 2009. Although that year Hui Ka Yan after it went public on the Hong Kong Stock Exchange, it retained a super-majority stake in 77% – and over the years, even as the company’s debt grew more and more to sky-high levels, Evergrande (almost) never lost dividends.
These dividends could be used to raise the company’s capital or to pay off debt. But they were taken from Evergrande and for the most part put in one man’s pocket. This is in view of the fact that only a smaller part of the capital was allocated by investors, except Hui Ka Yan, founder of a company that has attracted investors in recent years with a 13% stake and Gucci bags.
From a rural and very humble background, it has grown to China’s richest man has been driving China’s economic transformation since the 1990s… He started real estate development just in time to cope with the rapid economic growth and insatiable demand for housing associated with the rural exodus that was the source of some of China’s largest metropolitan areas today. He even had a fortune estimated at the equivalent of over 30 billion euros.
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Now that the value of Evergrande shares on the stock exchange has fallen by more than 80%, its global capital has shrunk to the equivalent of about 10 billion euros (Forbes score). That is, most of his wealth comes from dividends received from a company with a debt of more than $ 300 billion (about 255 billion euros) – and she did not even have to pay taxes on these dividends, because this does not happen in Hong Kong.
In 2010, in the first (full) year of Evergrande’s existence on the stock exchange, with the company’s $ 13 billion in debt, Hui received almost 200 million dividends… Five years later, in 2015, when Evergrande already owed the bank and investors 95 billion, the president received almost from the company. 600 million dividends…
2016, in which debt nearly doubled to $ 180 billion, was the only year that no dividend distribution was made. But shortly thereafter, in 2017, Hui Ka Yang took revenge and left. 1.777 million dividends, after 2,232 million in 2018… At that point, total debt reached the equivalent of $ 243 billion, according to company reports and accounts cited by Forbes.
The next year, 2019, with debt already rising to $ 286 billion, Hui Ka Yang nevertheless offered himself over $ 1 billion in dividends, which only declined in 2020, the year when debt has crossed the $ 300 billion threshold, that is, has tripled in five years (since 2015)… Even in that year 2020, with this level of debt and a worldwide pandemic, Hui Ka Yang earned $ 239 million in dividends.
Hui Ka Yan photographed in 2009 when Evergrande went public on the Hong Kong Stock Exchange.
The decapitalization that occurs when dividends are paid is one of the risks that currently heightens concerns about the company’s survival. To alleviate this capital shortage, according to a report by The New York Times, the group asked employees themselves to invest in savings products sold by Evergrande (in fact, by asking them to lend money to the company) – whoever refused could not receive a bonus premium.
Several cities in China are hosting demonstrations organized by the same Evergrande employees who say their employer convinced them to invest in these “money management” products – now they face a serious risk of losing everything or almost everything. … Some investors have already been offered payment extensions, but without guarantees.
And there is another problem: if Evergrande collapses and its operations are suspended, those who have already made money (initial deposits) to the company to buy houses for them now risk being left without money – and without a home. The financial pressures are “enormous,” Evergrande admitted, blaming newspapers and the press for “negative news” that is dampening the group’s sales (and presumably supplying cash in exchange for products it distributes to citizens).
