Investment in Developer Leaves $8.4 Billion Question Mark on Ping An’s Books
What’s new: Financial conglomerate Ping An Insurance (Group) Co. of China Ltd. said Thursday that it was exposed to risk in its investment in debt-ridden property developer China Fortune Land Development Co. Ltd. amounting to 54 billion yuan ($8.4 billion).
The investment includes 18 billion yuan in equity and 36 billion yuan in bonds, Ping An President Xie Yonglin said at a conference for the company’s financial results for 2020. To deal with China Fortune’s developing situation, Ping An will put aside money accordingly to absorb potential losses in a timely manner, he said.
The background: China Fortune and its subsidiaries have recently defaulted on more than $800 million in debt as the developer has struggled to raise cash, hurting investor confidence.
A subsidiary of Ping An became China Fortune’s second-largest shareholder in July 2018 (link in Chinese), when the developer’s liquidity problems worsened amid regulators’ tightening oversight to curb excessive borrowing and speculation in the real estate sector.
At that time, Ping An was interested in China Fortune’s business model of developing land to bring in industries and support local development, which is in line with the preference of insurance funds investment, Xie said at the conference.
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