By Clare Jim

HONG KONG (Reuters) – Mingling with power brokers at celebrations to mark the centenary of the Chinese Communist Party on July 1, a beaming Hui Ka Yan showed no signs that his company, China Evergrande, was facing mounting pressure with debt repayments.

Hui, dressed in a navy blue suit with an open-neck shirt and a tie, seemed relaxed while he stood at a podium that overlooked the Tiananmen Square festivities. Many considered this a gesture of support for the businessman who is a billionaire.

One month prior, Evergrande’s chairman hosted an exclusive meeting with over 1,000 suppliers. This was a time when he talked about his plans to deleveraging.

Hui’s heavily leveraged business strategy has now fallen apart. Evergrande’s liquidity crisis has been caused by Beijing’s loosening of rules on debt and speculation in property. The liabilities are equivalent to 1.97 trillion dollars ($302 billion). This is roughly half of Finland’s GDP. Markets fear that contagion risks could be a result.

Evergrande fell short of the dollar bond interest payment deadline last week and is now in serious danger of default.

Evergrande was not available for comment.

Hui wrote in September to express appreciation for employees’ hard work and stated that Evergrande would deliver the property projects promised and fulfill his responsibilities towards property investors, property buyers, financial institutions, partners, and other property owners.

Although he hasn’t made any public appearances since July 1st, Hui expressed appreciation for the hard work of employees and said that Evergrande would deliver property projects as promised. Recent photos from the company site show him at various meetings vowing to repay those who have invested in its wealth management products.

He is a former steel technie who was brought up in the rural Henan region by his grandmother. He established Evergrande in Guangzhou in 1996 and made his fortune selling low-priced homes.

Hui was a property developer who aggressively expanded his business by raising loans for land purchases and selling houses at lower margins to make it more profitable. Evergrande’s annual sales grew from 700 billion to $108 billion ($108 billion) by 2020.

Forbes reported that Hui was Asia’s most wealthy man, with an estimated net worth of $45.3 million in 2017. He is worth $13.4 Billion today.

According to three of his employees, Hui has a very low profile. He is a perfectionist who demands that everyone follow him work style.

His goals were ambitious. Hui answered reporters and investors in the last decade when they asked him about his high-leveraging projects. He said Evergrande’s high turnover was sufficient to pay its debts.

POKER PALS

Hui did not shy away from new ventures, especially in support of China’s larger goals. He was a keen enthusiast for electric cars, as well as soccer.

Hui met Hong Kong tycoons such as Cheng Yu Tuung, the late founder of New World Development, and Joseph Lau (former chairman of Chinese Estates Holdings).

He became part of the core group of “poker club,” a close-knit club of tycoons that played poker and often made investment deals with each other, according to three sources familiar.

He was composed the first time he came to the club. One of the people who was briefed by the tycoons stated that he knew he had lost much money during the games, and that he gained the affection of Cheng.

Evergrande’s prospectus states that Cheng invested $150 million in Evergrande a single year prior to the 2009 Hong Kong IPO. He helped Evergrande through a crisis after aggressive expansion.

Chinese Estates disclosed over the years billions in investments in Evergrande’s shares and bonds, making it the biggest Asian issuer of dollar junk bond bonds. Chinese Estates has not responded to our request for comment.

Evergrande was warned to take care of its finances by regulators because Hui has a number of highly leveraged businesses.

A senior analyst said, “He has done everything right politically, but he has also borrowed so much – in a sector the government has warned against excessive borrowing or over-speculation.” The analyst declined to identify themselves as they were not permitted to discuss media.

Hui, who was a 2018 China Charity Awards winner for the 8th consecutive year, said Evergrande has paid more than 10 million yuan and had paid tax totalling to 185 billion in 22 years.

Without the country’s reform of higher education policy, I would not have been able to leave the village. Hui explained that university would not have been possible without the generous scholarship provided by China, which was 14 yuan each month.

Evergrande today would not be possible without the good country’s reform policy and opening up. Everything Evergrande and me have are given by the Party. They’re also given by society and the country.

($1 = 6.4627 renminbi)