Evergrande’s boss forced to sell an additional 277.8 million shares as China’s government

• The sale of 277.8 million pledged shares was due to forced selling by a third party.
• The forced sales cut Evergrande chairman Hui Ka Yan’s stake in the company from 61.88% to 59.78%.
• According to Bloomberg calculations, the shares were worth around HK$498 million (US$64 million).

The chairman and founder of debt-laden Chinese developer Evergrande has been forced to cut his stake in the company, according to filings with the Hong Kong Stock Exchange.

The sale of 277.8 million shares sold last Monday to Thursday was due to forced selling by a third party with whom billionaire Hui Ka Yan pledged the shares. The filings showed that the sale was to enforce a “security interest” in the shares.

The documents did not disclose who the third party was or how much the shares were sold for, but according to Bloomberg calculations, they would be worth around HK$498 million (US$64 million) based on the average Evergrande share price last week. 

The forced sales cut Hui’s stake in Evergrande last Friday from 61.88% to 59.78%, according to the disclosures.

This latest disposal adds to the list of Hui’s personal assets has sold in recent months, and comes as the Chinese government has signaled that there will be no bailout for Evergrande, with central bank governor Yi Gang saying last Thursday that Evergrande’s inability to meet its obligations is a market event, Bloomberg reported.

Shenzhen-headquartered Evergrande is the world’s most indebted developer, with $300 billion in liabilities and it’s being scrutinized by investors who fear its collapse could send the rest of the sector — and possibly the rest of the world — into crisis.

Separately on Thursday, Fitch Ratings cut its rating on Evergrande and said it considered the property giant to be in default after two subsidiaries missed coupon payments. 

The Chinese government had instructed Hui to use his own money to pay down company debt, unnamed sources told Bloomberg in October.

In late November, Hui sold 1.2 billion shares — his first divestment since Evergrande went public in 2009, according to Bloomberg.

He is now worth $6.23 billion — down from a high of $42 billion in 2017, according to the Bloomberg Billionaires Index.