Hui Ka Yan's Wealth Drops by $12 Billion

It is no news that the Covid-19 pandemic has hit the global economy hard, and many businesses have crumbled since then. On the flip side, quite a number of businesses and billionaires have thrived amid the coronavirus pandemic, yet, many global billionaires have lost fortunes.

Asia’s former richest man, Hui Ka Yan, a real estate mogul who aspires to become the world’s biggest electric car maker has seen his wealth plunged by $12 billion since the pandemic began. In 2017, Hui Ka Yan was crowned as the richest man in Asia with a net worth of $45.3 billion. Now his net worth stands at $22.4 billion. It is believed that the bulk of his fortune is generated from his Evergrande Group, although the company reportedly lost 40% of its value this year. It’s losses amount to debts and falling profits, and the ravaging coronavirus pandemic which has put the Asian market on a slowdown.

On Tuesday, Evergrande warned that income would be slashed due to sales of underpriced clearance properties. In addition, the company saw a 53% to 17.3 billion yuan ($2.4 billion) in its profit from 2019. In a press conference, Hui pledged that company’s development model would change as sales will be prioritized and land reserves reduced. In addition, he said that a portion of the proceeds will be used to pay part of Evergrande’s 1,848 billion yuan debt, reducing it to 400 billion yuan over the next two years.

The major challenge Hui faces, however, is that of the total debt amount, 372 billion yuan, or 20% is short term borrowings that needs to be repaid within 12 months. Notwithstanding, the billionaire has shown great determination to settle debts by using “the strongest resolution and greatest vigor.” In mid-2019, Evergrande’s net gearing ratio, measured by total debt and shareholder’s equity, was 159%, up from 151.2%.

The company intends to bring in cash through discounted home sales. In a strategic attempt to beat the market, Evergrande offered really attractive discounts that they hope would bring in more potential homebuyers. Hopefully, more people would take advantage of this offer and sign purchase agreements electronically.

Some analysts and experts have supported Evergrande’s strategic move. They believe that there is no challenge with steep discounts so long as the company is able to get some cash.

While the company plans to settle about 80% of its debt over the next two years, Hui Ka Yan has been using new loans to refinance the company’s existing debts. In January, Evergrande issued $6 billion to lenders including China CITIC Bank International, Credit Suisse, and UBS, with interests as high as 12%.