Evergrande Delisting: What Led To Shocking Fall Of China’s Largest Property Giant
Evergrande’s inevitable collapse was triggered by its massive debt, which also sent shockwaves in China’s economy. Experts said this delisting was expected.
Evergrande, once China's largest property developer, was delisted from the Hong Kong Stock Exchange on Monday. The company had been listed for for nearly 15 years and, at its peak, had a stock market valuation of over $50 billion.
Evergrande’s inevitable collapse, triggered by its massive debt, sent tremors through China's economy. Experts said the delisting was expected and final, and there is no chance of a return.
"Once delisted, there is no coming back," Dan Wang, China director at political risk consultancy Eurasia Group, told BBC.
The three-decade-old company is now seen as a symbol of China’s real estate crisis.
What Happened To Evergrande?
Evergrande, formerly known as the Hengda Group, was once a symbol of China’s rapid economic rise. Its founder, Hui Ka Yan, rose from humble beginnings to build the company and, in 2017, briefly became Asia’s richest man with a net worth of $45 billion.
His wealth has now plummeted below $1 billion. In March 2024, he was fined $6.5 million and banned from China’s markets for life after authorities found out that Evergrande had inflated its revenue by $78 billion, BBC reported.
Now, liquidators are checking if his personal assets can repay debts. When Evergrande collapsed, it had 1,300 projects in 280 cities in the country, according to BBC.
In addition to real estate, the Evergrande empire included an electric car company and China’s top football team, Guangzhou FC. The team was removed from the league earlier this year due to unpaid debts.
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Evergrande had borrowed $300 billion, making it the world’s most indebted property developer. However, its troubles began in 2020 when China introduced rules to limit borrowing by big developers. Evergrande struggled under the new limits and in order to stay afloat, it sold homes at big discounts to keep cash flowing.
Regardless, the company’s heavy debt and risky growth finally caught up with it and it started defaulting on some of the overseas debts.
In January 2024, after protracted legal battles, the Hong Kong High Court ordered Evergrande to wind up. Its shares were already suspended and faced delisting. By then, the company had lost over 99% of its stock value. The court acted after Evergrande failed to present a plan to repay its massive overseas debts.
Evergrande still owes $45 billion and has only managed to sell $255 million worth of assets so far.
