Hui Ka Yan, the founder of China Evergrande Group, has a net worth of $979 million, according to the Bloomberg Billionaires Index, with shares of his debt-laden real estate firm trading at just HK$0.24 (3 cents) each. China Evergrande shares have fallen 86% since trading resumed in late August.
While Hui’s fortune may appear insignificant in the context of a police investigation into suspected crimes committed by the property mogul, creditors attempting to limit losses from one of China’s largest business catastrophes are very interested in the worth of his holdings. The decline also demonstrates how far Hui has fallen after riding the country’s real estate bubble for more than a decade.
Hui was formerly Asia’s second-richest man, with a net worth of $42 billion at his peak in 2017, but his fortune has dropped 98% since then, according to Bloomberg’s wealth index. The founder is currently in police custody, leaving his enterprise in limbo with no clear reorganization strategy in sight.
A final test later this month might nearly wipe all his money. The world’s most indebted developer will appear in court in Hong Kong on October 30 to answer a petition to liquidate the company.
According to Jonathan Leitch, a partner at Hogan Lovells in Hong Kong, if a winding-up order is issued, liquidators will be appointed to transform Evergrande’s assets into cash for the benefit of all creditors.
“Potentially, creditors end up owning the business and shareholders get wiped out,” Leitch went on to say. Still, if Hui is kept on board to see the restructuring through, he may be able to maintain some shares as an incentive, according to the lawyer.
In another twist, Hui’s wife Ding Yumei was identified as a third-party independent in an August filing, implying a divorce and asset split.
Ding has owned a 6% share in Evergrande, valued at around $24 million, through a British Virgin Islands vehicle solely owned by her since the company’s Hong Kong debut in 2009. Previously, her ownership was listed in Evergrande’s records as Hui’s spousal interest, but it now shows Ding as a separate beneficial owner. Ding should have received more than $500 million in cash dividends from this stock over the years. It is unknown how Hui divided his assets with Ding.
When contacted by Bloomberg, an Evergrande media spokesperson declined to comment.
Hui has been pledging assets as Chinese officials pressured him to utilize his own holdings to pay debts. One of his magnificent mansions on Hong Kong’s peak is on the market for HK$880 million after falling into receiver’s hands. It was unable to sell earlier this year because offers fell short of the creditor’s asking price.