Once Asia's Second Richest Person, How This Chinese Billionaire Lost 93% Of His Fortune

64-year-old Hui Ka Yan was once one of China¡¯s richest and most influential titans, bridging business and high-level politics. But the past few years have not been great for the super-rich in China, particularly those who built their fortune in the country¡¯s once red-hot property market.

93% Net Worth Lost

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These days, the fortune of the chairman of real estate developer China Evergrande Group is considerably diminished. He¡¯s down to about $3 billion from its peak of $42 billion in 2017, which once made him the second-richest person in Asia, according to the Bloomberg Billionaires Index.

Evergrande is China¡¯s most indebted developer with $300 billion in liabilities and has been at the heart of the country¡¯s real estate troubles since 2021. Hui, also known as Xu Jiayin in Mandarin, used his personal wealth to prop up his embattled company, selling his houses and private jets, as per CNN.

But that was far from enough and Evergrande defaulted on its US dollar bonds in December 2021 after scrambling for months to raise cash to repay creditors, suppliers and investors. Last year, the firm failed to deliver its preliminary debt restructuring plan, leading to further concerns about its future.

Evergrande is massive: The real estate giant has about 200,000 employees, raked in more than $110 billion in sales in 2020 and owns more than 1,300 developments in more than 280 cities.

Analysts have long been concerned that a collapse of Evergrande could further trigger wider risks for China¡¯s property market, hurting homeowners and the broader financial system. As per the report, real estate and related industries account for as much as 30% of China's GDP.

The Billionaire & His Firm's Message

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Hui and Evergrande, however, kicked off 2023 on a hopeful note. In an email seen by AFP, chairman Hui Ka Yan told staff that "2023 is a key year for Evergrande to fulfil its corporate responsibility and do everything in its power to ensure the delivery of construction projects".

"As long as everyone at Evergrande pulls together, never gives up, (and) works hard... we will certainly be able to complete the tasks of guaranteeing deliveries, repaying all kinds of debts, and resolving risks," Hui wrote.

Asia's Richest Woman Loses 50% Of Fortune Amid China's Real Estate Crisis

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Last year in July, Asia¡¯s (then) wealthiest woman, Yang Huiyan, lost more than half her fortune over the past year amid the worsening of China¡¯s real estate sector¡¯s crisis.

41-year-old Yang Huiyan is a majority shareholder in China¡¯s biggest property developer Country Garden, and had seen her net worth plunge by more than 52% to $11.3bn from $23.7bn a year ago last year, according to the Bloomberg Billionaires Index.

In a sign that the real estate sector¡¯s crisis has been spreading to developers, which were previously thought to be rock solid, Yang¡¯s fortune took a major hit in July 2022 when the Guangdong-based Country Garden¡¯s Hong Kong-listed shares fell 15% after the company announced it would sell new shares to raise cash.

China's 'Warren Buffett' Rushes To Sell Assets

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And barely three months after this, the debt crisis that had roiled China¡¯s real estate market got spread to one of the country¡¯s largest conglomerates. Fosun, the Chinese conglomerate company which is the owner of the English Premier League soccer team Wolverhampton Wanderers FC, Portugal¡¯s largest bank Millennium BCP and French tourism company Club Med, is no longer able to raise capital, so it must sell off assets before it defaults on its short-term debt.

Its billionaire co-founder Guo Guangchang, who resides in Hong Kong, likes to say that he emulates 92-year-old Warren Buffett by following the same investment strategy of using the steady cash flow from insurance firms to acquire other businesses. It enabled the 55-year-old to build Shanghai-based Fosun into an eclectic empire, as per Forbes.

But now, "China¡¯s Warren Buffett" Guo is struggling with a problem Berkshire¡¯s Buffett never had. Fosun had been borrowing heavily to fund its acquisition spree and analysts are concerned that it doesn¡¯t have the cash to cover its short-term liabilities. Guo, who had previously relied on funding from bond markets as well as easy credit from banks, reportedly saw his flagship investment arm Fosun International downgraded by the rating agencies deeper into junk territory.

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